Fitch Affirms Commerce Group's IFS & Debt Ratings; Outlook Stable.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the 'BBB' long-term issuer and senior debt ratings of the Commerce Group, Inc. (CGI CGI in full Common Gateway Interface. Specification by which a Web server passes data between itself and an application program. Typically, a Web user will make a request of the Web server, which in turn passes the request to a CGI application program. ). Additionally, Fitch has affirmed the 'A' insurer financial strength ratings on CGI's four insurance subsidiaries (see list below). The Rating Outlook is Stable. The ratings are based on a history of underwriting profits Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. , leading market share position in the Massachusetts automobile insurance market, strong capitalization at the operating company operating company A business that engages in transactions with outsiders. level and adequate liquidity. Offsetting these positives is CGI's significant reliance on a single market. Although CGI has attempted to diversify its book of business geographically, it continues to be concentrated in Massachusetts with 86% of its premiums written in the state. Substantial changes are being contemplated in the Massachusetts regulatory environment and CGI would be disproportionately affected by those changes. Fitch will continue to watch closely all changes and evaluate their impact on CGI. Likewise, Fitch believes CGI's close auto club affinity relationship represents a competitive advantage. However, any significant change in that relationship could materially affect CGI's ability to attract and retain profitable customers. On Dec. 31, 2004, CGI had total capital of $1,419 million including the $298 million of debt. The corporation's debt-to-adjusted total capital ratio, adjusting for FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). 115, was 21.3% as of year-end 2004. Fitch anticipates the corporation will maintain adequate interest coverage levels going forward to support debt servicing requirements. CGI reported $214 million of net income on net earned premium Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. of $1.6 billion in 2004. The company's total assets at year-end were $3.6 billion with $1.1 billion of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . CGI's statutory combined ratio was 87.7% for full year 2004. Entity/Issue/Type Action Rating/Outlook Commerce Group, Inc. --Long-term issuer Affirm 'BBB'/Stable. --$300 million 5.95% fixed coupon senior notes due 02/26/2013 Affirm 'BBB'/Stable. Insurer Financial Strength Ratings: Commerce Insurance Company Affirm 'A'/Stable. Citation Insurance Company Affirm 'A'/Stable. Commerce West Insurance Company Affirm 'A'/Stable. American Commerce Insurance Company Affirm 'A'/Stable. The noted ratings on the Commerce Group, Inc. and its insurance companies were initiated by Fitch as a service to users of Fitch's ratings and are based primarily on public information. |
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