A.M. Best upgrades Allstate Insurance to "A+" (Superior) from "A" (Excellent).OLDWICK, N.J.--(BUSINESS WIRE)--June 3, 1997--Effective immediately, A.M. Best Co. has raised the rating on Allstate Insurance Co., Northbrook, Ill., to "A+" (Superior) from "A" (Excellent). The rating applies to Allstate Insurance and its five reinsured subsidiaries and is based on their consolidation with a separately rated subsidiary--Allstate Floridian Insurance Co. The upgrade reflects the group's sustainable strong operating performance and substantial catastrophe reduction progress. In addition, Allstate benefits from its well-recognized franchise, strong capitalization, and significant holding company financial flexibility -- with substantial debt capacity and liquidity through a major bank credit facility, shelf registration availability, commercial paper program, and strong operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . These strengths are derived from Allstate's dominant 12% personal lines national market share, competitive expense advantage, cost-efficient exclusive agents, and highly focused business strategies. Since 1994, Allstate's operating performance has been outstanding and its surplus growth has been extraordinary-- having increased by two-thirds from strong earnings and large capital gains. Finally, Allstate benefits from its tightened core personal lines focus, having divested its commercial, reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. , and mortgage guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. businesses over the past two years. During 1996, Allstate made substantial progress in reducing its exposure to catastrophes. In Florida, Allstate formed a dedicated property insurer--Allstate Floridian--sold renewal rights on select property policies to Clarendon National, transferred wind damage coverages to the Florida Windstorm wind·storm n. A storm with high winds or violent gusts but little or no rain. windstorm A storm with high winds or violent gusts but little or no rain. Pool, increased deductibles, modified coverages, increased rates and purchased external catastrophe reinsurance. Allstate also is benefiting from the California Earthquake Authority Established in September 1996 by the California Legislature, the California Earthquake Authority is a privately funded, publicly managed organization that sells California earthquake insurance policies through participating insurance companies. and has begun transferring its earthquake policies to the authority. Allstate's earnings volatility and susceptibility susceptibility the state of being susceptible. Refers usually to infectious disease but may be to physical factors such as wetting or to psychological factors such as harassment. to severe catastrophes have moderated to an acceptable range for Superior-rated insurers, with the group's net catastrophe leverage equating e·quate v. e·quat·ed, e·quat·ing, e·quates v.tr. 1. To make equal or equivalent. 2. To reduce to a standard or an average; equalize. 3. to roughly 10-15% of 1997 projected surplus. Going forward, Allstate's largest 100-year catastrophe event, a Northeast hurricane, will be comfortably funded by over $2 billion of earnings. These strengths are offset by the group's historically volatile earnings, ongoing catastrophe exposure and increased personal auto competition. Nevertheless, Allstate's rating outlook is stable, based on the group's substantial earnings power, strong operating fundamentals, reduced catastrophe severity and strong surplus generation. In addition, A.M. Best believes Allstate is well positioned to sustain attractive growth in its standard and nonstandard non·stan·dard adj. 1. Varying from or not adhering to the standard: nonstandard lengths of board. 2. auto segments through internal growth or acquisition. Its strategic move of broadening its nonstandard personal auto distribution to include independent agents will fortify for·ti·fy v. for·ti·fied, for·ti·fy·ing, for·ti·fies v.tr. To make strong, as: a. To strengthen and secure (a position) with fortifications. b. To reinforce by adding material. its number one position. Allstate is the second-largest property/casualty group in the U.S. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. CONTACT: Jeffrey Dunsavage (908) 439-2200, ext. 5618 http:/www.ambest.com |
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