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CRUM & FORSTER'S CLAIMS PAYING RATING LOWERED TO 'A-' BY FITCH -- FITCH FINANCIAL WIRE --

 CRUM & FORSTER'S CLAIMS PAYING RATING LOWERED TO 'A-' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Dec. 10 /PRNewswire/ -- The claims-paying ability rating of the Crum & Forster Insurance Companies intercompany underwriting pool is lowered to 'A-' from 'A+' by Fitch. The action was necessitated by a review of the Friant Power Authority's $40.5 million 1983 hydroelectric revenue bonds due 2013, which was also lowered to 'A-'. The downgrade reflects Fitch's revised claims paying assessment for the debt's guarantor, Industrial Indemnity, which is part of the Crum & Forster intercompany pool. The Crum & Forster group is owned by Xerox Financial Services Inc., a wholly owned subsidiary of the Xerox Corp.
 During the last eighteen months, Crum & Forster has taken active steps to improve profitability and its capital position by divesting non-strategic businesses and reducing expenses. Through September 1991, Crum & Forster's operating results improved moderately, partly due to better loss experience. Despite this improvement, the company's results were still well below the industry average. It is unlikely that the current soft market for commercial
property and casualty rates will turn before 1993. Therefore, meaningful earnings improvement will not likely materialize before 1994.
 Balance sheet leverage continues to be somewhat higher than its peers, largely due to years of poor reserve development and write-off of reinsurance recoverables. While Fitch believes Crum & Forster's reserve position has improved, we remain concerned with the level of reinsurance recoverables, many of which have questionable collectibility. The company has reduced the vulnerability of its surplus to the equity markets by reducing its common stock holdings. It continues to maintain a liquid and highgrade fixed income portfolio.
 Xerox has made no capital contributions since 1989, in line with its objective that Crum & Forster be a self-supporting operating unit. While there is no formal support agreement from its parent, Xerox's ownership of Crum &
Forster is a positive. However, Fitch believes further support will be given more consideration, in light of the substantial contributions already made.
 Friant Power Authority, headquartered in Terra Bella, Calif., initially contracted to sell electricity from its hydroelectric project to Pacific Gas & Electric Co. under a long-term take-and-pay contract. Due to the five-year drought in California, generation revenues have been insufficient to meet debt service requirements and the reserve fund has been depleted. As a result, Industrial Indemnity has been required to meet the authority's demands which, as of Aug. 25, 1991, totalled $4.2 million.
 -0- 12/10/91
 /CONTACT: Lygia X. Campbell, 212-908-0500, or David P. Wells, CFA, 212-908-0517; or Susan Courtney (for Friant Power Authority), 212-908-0503, all of Fitch/ CO: Crum & Forster Insurance Companies ST: New Jersey, California IN: INS SU: RTG


JT -- NY033 -- 0996 12/10/91 11:57 EST
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Publication:PR Newswire
Date:Dec 10, 1991
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