Superior Natl Insurance Group's S&P Outlk Now Stable.NEW YORK--(BUSINESS WIRE)--May 7, 1998--(S&P) NY -- Standard & Poor's CreditWire 5/7/98 -- Standard & Poor's today revised its outlook on Superior National Insurance Group Inc. (SNIG), Superior National Capital Trust I, and Superior National Insurance Co.. to stable from positive. Additionally Standard & Poor's affirmed its double-'B' counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit rating on SNIG and its double-'B' rating on Superior National Capital Trust I's $100 million preferred securities, which are fully guaranteed by Superior National Insurance Group Inc. Standard & Poor's also affirmed its triple-`B' claims-paying ability and counterparty credit ratings on Superior National Insurance Co. This action is a result of SNIG's announcement that the company has entered into a definitive agreement to acquire Business Insurance Group Inc. and its subsidiaries from Foundation Health Systems Inc. for a total of about $285 million. Foundation Health Systems will provide $175 million of adverse development protection on Business Insurance Group losses and loss-adjustment expense reserves. SNIG will enter into a three-year quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). 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. agreement under which all accounts with over $25,000 in premiums will be completely reinsured. The reinsurance will stabilize operating results and improve the capital position of Superior National Insurance Group and the Business Insurance Group. The acquisition will create California's largest private-sector workers compensation insurance company. SNIG will finance the acquisition through the issuance of common stock and senior notes. Insurance Partners L.P. and its successor fund, have committed to purchase at least $94 million of the common stock. The remaining stock will be offered to existing stockholders. If the offering to existing holders is not fully subscribed Fully Subscribed A situation in which an underwriting firm has successfully sold to investors all of its available issues of a public offering of securities. When the issue is fully subscribed, the underwriter's risk of being undersubscribed (being unable to sell its allotment of , Insurance Partners has committed to purchase the remaining shares and also agreed to certain restrictions protecting minority stockholders. The acquisition provides an opportunity for SNIG to realize strategic and financial benefits. The consolidation establishes SNIG as a major force in the California workers compensation market and provides the company with nationwide distribution channels for diversification. The acquisition will allow SNIG to expand its operations, achieve improved economies of scale, and leverage its computer systems. Financially the acquisition is expected to improve operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. for the consolidated insurance subsidiaries. OUTLOOK: STABLE While the acquisition provides Superior National Insurance Group with economies of scale and other financial benefits, Standard & Poor's believes that due to the time needed to assimilate as·sim·i·late v. 1. To consume and incorporate nutrients into the body after digestion. 2. To transform food into living tissue by the process of anabolism. such a large acquisition into the group, long-term financial benefits are uncertain at this time. While Superior National Insurance Group has additional channels for expansion into other states, Superior National Insurance Group essentially remains a mono-line, one-state company, although on a larger scale. The additional debt that the group plans to issue commensurate with the acquisition, will raise financial leverage somewhat, Standard & Poor's said.---CreditWire CONTACT: Joanne Balling, ACAS ACAS Cardiology A clinical trial–Asymptomatic Carotid Atherosclerosis Study which evaluated the 5-yr risk of fatal and non-fatal stroke-primary outcome in Pts with asymptomatic but severe carotid atherosclerosis. See Carotid stenosis. , New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-1926 Robert G. Partridge partridge, common name applied to various henlike birds of several families. The true partridges of the Old World are members of the pheasant family (Phasianidae); the common European or Hungarian species has been successfully introduced in parts of North America. , New York (1) 212-208-8551 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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