Acceptance Insurance Ratings Assigned by S&P.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/21/97-- Standard & Poor's today has assigned its triple-`B' claims-paying ability rating to the members of The Acceptance Pooled Insurance Companies* and American Growers Insurance Co., collectively known as Acceptance Insurance Companies Group (AICG). Standard & Poor's also has assigned its triple-`B' issuer credit rating to Acceptance Insurance Companies Inc. (AIC AIC Association des Infermières Canadiennes. ) and its double-`B'-plus rating to the preferred securities of AICI AICI Association of Image Consultants International AICI Acç o para o Acesso da Indùstria a Circuitos Integrados (Portugal) Capital Trust, totaling almost $75 million. These securities are fully guaranteed by AIC. The ratings are based primarily on AIC's strong crop insurance niche position, which is partially offset by the company's underperforming noncrop lines of business. Moderate financial leverage at the holding company, solid fixed-charge coverage ratios, strong financial flexibility, and an adequate level of capital at the operating companies are other factors contemplated. Distinguished by its 15% market share in the government-sponsored Multi-Peril Crop Insurance (MPCI MPCI Multiple Peril Crop Insurance MPCI Mouvement Patriotique de Côte D’ Ivoire (Patriotic Movement of the Ivory Coast) MPCI Mobile Protocol Capability Indicator MPCI Multi-Point Courtesy Inspection MPCI Mini Pci MPCI Managing Partners Confidence Index ) program, AICG operates as a specialty lines carrier with a focus on small nonmetropolitan commercial and personal lines accounts. Including the nonrecorded government subsidized portion of MPCI premium, the crop and noncrop businesses are equivalent in size on a gross premium basis. Overall revenue and earnings for the corporation are $381.4 million and $30.3 million, respectively. Robust operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in AICG's crop division, coupled with poor performance in its noncrop insurance lines, have produced an average combined ratio slightly below 100% over the last three years. Standard & Poor's expects similar future results. Although crop insurance offers AICG strong, yet volatile, returns, Standard & Poor's believes that it will be difficult for the noncrop lines to produce an adequate level of profitability. The preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. issuance, used mainly to pay down existing holding company bank lines, will result in total financial leverage (debt plus preferred) of 31%. Adding to the company's financial flexibility and debt servicing ability is a newly established profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of arrangement between the crop company, American Growers, and its marketing arm, American Agrisurance. This will allow AIC to receive a partially unregulated flow of funds Flow of funds In the context of municipal bonds, refers to the statement displaying the priorities by which municipal revenue will be applied to the debt. In the context of mutual funds, refers to the movement of money into or out of a mutual funds or between or among not subject to insurance department dividend restrictions. As such, statutory cash flow fixed-charge coverage fixed-charge coverage The number of times that a firm's operating income exceeds its fixed payments. Fixed-charge coverage is a measure of a firm's ability to meet contractually fixed payments, with high coverage indicating significant flexibility for making is expected to exceed 3.5 times (x), while GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). interest and fixed-charge coverage should be greater than 13x and 6.5x, respectively. OUTLOOK: Stable. EXPECTATIONS: Standard & Poor's expects AICG's premium base to increase by more than 10% as the government pushes more farmers to the private crop insurance sector, while the company decelerates growth in the noncrop lines. Earnings for the company, buoyed by the crop lines of coverage, should grow at a similar rate, with overall combined ratios at 100%. Capital adequacy at the operating companies is currently considered sufficient and is expected to remain stable. -- CreditWire -0- *Pool members include: Acceptance Insurance Co., Redland Insurance Co., Acceptance Indemnity Insurance Co., Phoenix Indemnity Insurance Co., and Acceptance Casualty Insurance Co. CONTACT: Darin Feldman, New York, 212/208-8746 Matthew T. Coyle, New York, 212/208-8307 |
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