S&P Affirms `A' Ratings on If; Outlook Developing.Business Editors LONDON--(BUSINESS WIRE)--Feb. 9, 2001 Standard & Poor's today 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. its single-'A' long-term counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and insurer financial strength ratings on If Property & Casualty Insurance Ltd. (publ) (If). The affirmation A solemn and formal declaration of the truth of a statement, such as an Affidavit or the actual or prospective testimony of a witness or a party that takes the place of an oath. An affirmation is also used when a person cannot take an oath because of religious convictions. follows If's announcement of its 2000 results and its planned acquisition of the insurance portfolio of Forsakrings AB Volvia (Volvia; not rated), the motor insurer of the Swedish truck manufacturer, Volvo (publ.), AB (Volvo; --/--/A-2). Standard & Poor's believes that the Volvia portfolio will complement If's existing book of business. The affirmation reflects the expectation that over the next few months If will strengthen its capital position to a level consistent with its single-'A' ratings. The outlook remains developing. The Volvia book comprises insurance for cars and trucks sold at point of sale through Volvo and Renault franchises. The portfolio's performance record is good, averaging a combined ratio of 106.5% during 1995-2000. If has been coinsuring the Volvia portfolio for several years and therefore already understands its characteristics. The acquisition will boost If's net premium volume by about 7%. Completion of the transaction is subject to regulatory and legal approval, receipt of which is expected by mid-2001. The acquisition of Volvia's book (net premium volume of about Swedish krona Noun 1. Swedish krona - the basic unit of money in Sweden krona Swedish monetary unit - monetary unit in Sweden ore - a monetary subunit in Denmark and Norway and Sweden; 100 ore equal 1 krona {SKr} 1.3 billion {$134.6 million} and technical reserves of SKr2.3 billion) for SKr562 million has been mainly financed through a SKr500 million capital injection by If's shareholders on Feb. 8, 2001. Furthermore, If is expected to complete a EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 200 million hybrid capital issue in March 2001. These two capital enhancements are very important for If, particularly since the benefit of a greatly improved underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance in 2000 (with a combined ratio of 111%; 120% in 1999) was negated by heavy unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. during the fourth quarter, leading to a retained loss for 2000 of SKr708 million. If's current capital adequacy is inconsistent with its single-'A' ratings and these ratings will most likely be lowered in the unlikely event that the hybrid capital issue (or a similar capital enhancement) is not completed. If's ratings are driven by the company's significant business franchises in the Swedish and Norwegian nonlife insurance markets, which result in a strong overall business position. This position is underpinned by strong prospective capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. and financial flexibility. If's earnings prospects are considered to be good. OUTLOOK: DEVELOPING The outlook is based on uncertainty regarding the future ownership of If, Standard & Poor's said. ---CreditWire |
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