Fitch Affirms ACA's `A' Rating, Removes It From Rating Watch.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 28, 2001 Fitch affirms ACA ACA - Application Control Architecture Financial 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. Corp.'s (ACA) `A' insurer financial strength rating and removes its Rating Watch Negative status. ACA has informed Fitch that $45 million of capital committed on Jan. 31, 2001 from three existing investors and two new investors has been received by ACA. Barring any large unforeseen insured losses, the additional equity should allow ACA to support its growth plans over at least the next several years and provide a cushion against the company falling below regulatory minimum capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Fitch had placed ACA's insurer financial strength on Rating Watch Negative on Jan. 24, 2001 after it appeared the company would not be able to raise the additional capital necessary to support its `A' rating. Fitch initially became concerned with ACA's financial condition in March 2000 after the company's standby standby Medtalk adjective Referring to the immediate availability of a certain specialist–anesthesiologist, surgeon, who can be deployed in a medical emergency. Cf Concurrent. capital facility was not renewed by the provider, and a cumulative $28 million of statutory operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the previous two years had put the company in danger of falling below minimum capital requirements of California, its largest source of business. ACA was able to sustain its operations last year by obtaining $15 million in additional capital in May 2000 and acquiring a replacement standby capital facility in June 2000. However, a $14 million statutory operating loss in 2000 and the seeming inability of the company to replace the capital had caused Fitch to put the company on Rating Watch Negative until it was able to close this $45 million equity infusion. ACA's three years of operating losses have been caused by an expense base that greatly exceeded its revenues. The company has not yet incurred an insured loss. ACA announced last month a reorganization of the company to better manage expenses in relation to revenues and focus more of its resources on insuring asset-backed securities Asset-backed security A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. asset-backed security A debt security collateralized by specific assets. , mortgage- backed securities and collateralized debt obligation Collateralized Debt Obligation (CDO) A general inclusive term which covers Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations, businesses. These lines appear to currently have greater potential for ACA than the municipal market, where it had focused its efforts previously. Fitch will monitor the progress of the company closely as it proceeds with its business plan. |
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