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CALIFORNIA INDEMNITY 'A' CLAIMS PAYING ABILITY ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --

CALIFORNIA INDEMNITY 'A' CLAIMS PAYING ABILITY ON FITCHALERT NEGATIVE
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Dec. 10 /PRNewswire/ -- California Indemnity Insurance Co.'s claims paying ability rating of 'A' is placed on FitchAlert with negative implications. This action follows the insurer's announcement that it is strengthening loss reserves by $20 million in response to worsening claims experience in the California workers' compensation insurance market, California Indemnity's principal business.
 California Indemnity is experiencing an acceleration of workers' compensation claims for "stress and strain" related injuries in the fourth quarter of 1991. The increase in claims appears related to the weak economy and high unemployment in certain regions of southern California that have contributed to more filings for this type of claim. Furthermore, the cost of investigating and settling many of these claims is rising and also has been factored into the reserve increase. Lastly, the California Insurance Commissioner's refusal to implement a requested rate increase for workers' compensation carriers in the state could have a further adverse affect on operating performance in 1992.
 The impact of the reserve increase on the insurer's capital has been offset by a $37 million capital infusion made late in the fourth quarter from the proceeds of a convertible debenture issue by its parent company, CII Financial, Inc. Following the capital contribution and the reserve action, California Indemnity's capital adequacy, investment quality, and liquidity all remain very good. However, the rating is placed on FitchAlert for evaluation of the implications of this development for the insurer's ongoing operations and the potential for further adverse development.
 California Indemnity is addressing this deterioration in underwriting by reviewing the rate adequacy of many of its policy renewals and by accelerating its move into northern California markets where loss experience has been far better than in the state's southern region.
 -0- 12/10/91
 /CONTACT: David P. Wells of Fitch, 212-908-0517/ CO: California Indemnity Insurance Co. ST: California IN: INS SU: RTG


KD -- NY057 -- 1154 12/10/91 15:44 EST
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Publication:PR Newswire
Date:Dec 10, 1991
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