Fitch Revises Trustmark Insurance Company's Outlook to Positive.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 revised the Rating Outlook on the 'BBB+' insurer financial strength ratings of Trustmark Insurance Company (Trustmark Insurance) and its sister company, Trustmark Life Insurance Company (Trustmark Life), to Positive from Stable. Fitch rates these companies on a combined basis given their shared senior management, investment management, and brand identification. Today's rating action reflects the positive steps taken by Trustmark Insurance to strengthen its capital position, improve its earnings profile, and diversify its operations. Trustmark Mutual Holding Company (Trustmark), the parent company of Trustmark Insurance and Trustmark Life, recently announced plans to sell its equity interest in Private Healthcare Systems, Inc. (PHCS PHCS Private Healthcare Systems PHCS Primary Health Care Service PHCS Preventive Health Care System PHCS Princeton Health Care System (Princeton, New Jersey) PHCS Senior Chief Photographer's Mate (Naval Rating) ) to MultiPlan, Inc., a large medical network leasing company. Although financial terms of the transaction were not publicly disclosed, Fitch believes that the sale will significantly enhance Trustmark's capital position. Fitch upgraded the insurer financial strength ratings of Trustmark Insurance and Trustmark Life on March 3, 2006, following an evaluation of the Trustmark's 2005 operating performance and an improvement in the company's capital position during the year. Today's Rating Outlook revision reflects Fitch's expectation that improvement in Trustmark's capital position as a result of the sale of PHCS, combined with sustained profitability, could potentially result in an upgrade of the company's ratings within the current rating cycle. Trustmark's ratings were lowered by Fitch in January 2005, reflecting the release of an unfavorable arbitration panel arbitration panel A group of individuals charged with resolving a dispute between individuals and/or organizations. Arbitration panels to resolve investment disputes are sponsored by self-regulatory organizations such as NASD. decision related to the company's involvement in a workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. carve-out agreement with another reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. . The business covered by this reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. contract was written by subsidiaries of Superior National Insurance Group (Superior National) prior to its seizure by the California Department of Insurance The California Department of Insurance (CDI), established in 1868, is the angency charged with overseeing the regulation of insurance regulations, enforcing statutes mandating consumer protections, educating consumers, and fostering the stability of insurance markets in the state in March 2000 and has experienced significant adverse loss development. The ultimate amount of claims liabilities for which Trustmark will be responsible continues to be subject to considerable uncertainty. In addition to uncertainty regarding future performance of the block of business covered by the reinsurance treaty Reinsurance Treaty (June 18, 1887) Secret agreement between Germany and Russia. Arranged by Otto von Bismarck after the collapse of the Three Emperors' League, it provided that each party would remain neutral if either became involved in a war with a third nation, and that , Trustmark's net loss exposure is clouded by a contract dispute with the primary reinsurer regarding Trustmark's share of the total claims covered by the treaty. Although the dispute is in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. with a resolution not expected until late 2006 or 2007, Fitch has assumed a worst-case scenario, specifically with regard to the dispute with the primary reinsurer for purposes of today's rating action. During 2005, Trustmark's capital position improved significantly due to operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and the company's issuance of $75 million of trust preferred securities on June 30, 2005. In Fitch's view, the improvement in the capital and surplus of Trustmark's operating subsidiaries, combined with the additional capital resulting from the issuance of the trust preferred securities at Trustmark Group, Inc. and the sale of PHCS, significantly enhance the company's ability to absorb its pending obligations. Fitch's ratings on Trustmark and Trustmark Life continue to reflect the combined company's improved earnings performance, high quality asset portfolio, and adequate risk-adjusted capitalization. Trustmark's performance has been favorably affected in recent years due partially to an improved premium pricing environment but also due to management focus on premium rate adequacy and expense controls. The ratings also consider increasing competitive challenges in the health insurance and managed care sector in which Trustmark operates. Lake Forest, Illinois-based Trustmark provides a variety of medical and dental products to the group and worksite markets. The company also offers claims and administrative services, primarily through its affiliated third-party administrator, CoreSource, Inc. At June 30, 2006, Trustmark Insurance and Trustmark Life reported combined total assets of $1.7 billion and capital and surplus of $330 million. The Outlook on the 'BBB+' insurer financial strength ratings of the following companies has been revised to Positive from Stable. -- Trustmark Insurance Company; -- Trustmark Life Insurance Company. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion