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A.M. BEST ISSUES PROPERTY/CASUALTY NINE-MONTH RATING REVIEWS

 OLDWICK, N.J., Dec. 15 /PRNewswire/ -- A.M. Best Company released the names of 80 property/casualty insurance companies whose Best's Ratings were changed, 20 that have been placed under review and three that have been placed on Best's Rating Watch List, based on a review of nine-month financial results, including the impact of Hurricane Andrew. The cumulative report of rating actions taken since A.M. Best released its annual rating reviews was published Dec. 14, 1992 in "Best's Rating Monitor," a supplement to the weekly "Best's Insurance Management Reports."
 A.M. Best reviewed 2,250 property/casualty insurers, 91 percent of the 2,468 companies assigned Best's Ratings last spring. The 80 rating changes included two upgrades, 25 lowered or downgraded ratings, four rating suspensions and 20 placed under some form of state supervision, among other rating actions. In addition, 23 companies were placed under review and subsequently had their ratings affirmed.
 Property/casualty insurance companies that were not reviewed did not provide A.M. Best with their nine-month financial results.
 A few of the more notable rating actions that became effective Dec. 14, 1992 are described below:
 A.M. Best has suspended the "B" (Good) Best's Rating of the American Integrity Insurance Company, effective Dec. 14, 1992 and has assigned a Best's Rating of "NA-11" (Rating Suspended). The rating suspension reflects the company's significant decline in policyholders' surplus during the first nine months of 1992 and its pending plans to raise capital or sell the company. American Integrity's policyholders' surplus declined 34 percent from year-end 1991 to $14.3 million at Sept. 30, 1992. This decline was largely attributable to unfavorable results on a block of Medicare supplement policies that was subsequently sold in September 1992.
 In addition to the recent sale of the unprofitable Medicare supplement business, capital raising discussions are underway, with several companies and individuals, including the possibility of a significant equity investment or merger.
 A.M. Best will reevaluate American Integrity's financial condition in mid-January when more has developed regarding the company's capital strengthening initiatives.
 Dec. 14, 1992, Crum & Forster insurance companies' Best's "A-" (Excellent) consolidated rating remains under review with negative short-term implications, pending further evaluation of the group's ongoing restructuring actions, capital requirements, regulatory approvals and future business plans. This rating review applies to five intercompany pool members led by United States Fire Insurance Company, and 14 affiliates that either reinsure with the pool or receive the rating of a parent that is a pool member.
 A.M. Best initially placed Crum and Forster's rating under review on Oct. 29, 1992, following an announcement made by Crum and Forster's ultimate parent, Xerox Corporation, regarding substantial third-quarter and unquantified fourth-quarter provisions that have been, or will be, established in connection with a major restructuring. This restructuring will realign Crum and Forster's legal structure into specialized business units focusing on specific market segments and will provide an enhanced capital structure for each of the business units to support ongoing underwriting commitments, potential loss reserves strengthening and potential additional provisions for reinsurance recoverables. The restructuring plan is being led by Joseph W. Brown, Jr., Chairman and CEO, and his new management team.
 A.M. Best is in the process of reviewing Crum and Forster management's progress toward satisfactorily addressing several issues and costs associated with the restructuring plan, including the level of capital support from Xerox Corporation. Best expects to complete its review and reevaluate the group's rating by the end of January.
 Effective Dec. 14, 1992, Best's "A+" (Superior) rating of Constitution Reinsurance Corporation, an affiliated professional reinsurer, and the "A-" (Excellent) rating of Viking Insurance Company of Wisconsin, an affiliated non-standard auto carrier, were affirmed and removed from Best's under review status. These operations are unaffected by Crum and Forster's business realignments. Management of these operations intends to take action to strengthen their balance sheets by year-end. It is expected that the 1992 year-end surplus of both of these companies will increase over Sept. 30, 1992 levels as these costs will be more than offset by the provisional restructuring charges recorded in their third-quarter financials.
 Effective Dec. 14, 1992, the Best's Rating assigned to Houston Casualty Company was upgraded from "B+" (Very Good) to "A-" (Excellent). This action reflects an infusion of $13 million by the parent company, HCC Insurance Holdings, Inc., after completing an initial public offering Oct. 28, 1992 which raised $15.4 million. The capital infusion significantly bolstered the company's capitalization and liquidity levels and enhanced its ability to market its products. (Note: This company was inadvertently omitted from "Best's Nine-Month Rating Monitor.")
 The Best's Rating assigned to the property/casualty operations of the Independent Life and Accident Group has been downgraded to an "A-" (Excellent) from an "A+"(Superior). This action reflects the magnitude of the Hurricane Andrew losses that weakened the group's consolidated policyholders' surplus level. It also reflects the group's continued vulnerability to catastrophe exposures. The rating applies to the group's four property and casualty pool members, led by the Independent Fire Insurance Company.
 The estimated gross loss from Hurricane Andrew was $175 million, with a net loss after reinsurance catastrophe recoveries of $57 million. This excludes reinstatement fees of $4 million. The approximate net after-tax charge to earnings is $43 million. Management advises that the loss will be partially mitigated by a $10 million capital contribution from the parent, the Independent Life and Accident Insurance Company. In addition, the group has increased its cessions under an existing quota share reinsurance arrangement and entered into a new arrangement for its automobile book, providing the group with an additional $10 million in surplus. By year end 1992, policyholders' surplus is projected to be $42 million, a 35 percent decline over the previous year.
 The group is taking several corrective actions in light of the impact of Hurricane Andrew on its operations, including a reduction in catastrophe exposure by the retrenchment of certain lines of business, particularly preferred and standard homeowners insurance. The group will continue to concentrate on providing fire and dwelling coverages. For 1993, the company has announced a wage freeze and plans to reduce administrative costs by an estimated $1.8 million. Management explained that 1993 will be a transitional year for the group as a result of the corrective measures.
 Effective Dec. 14, 1992, A.M. Best downgraded the consolidated Best's Rating of Norfolk and Dedham Mutual Fire Insurance Company and West Newbury Mutual Fire Insurance Company from "A+" (Superior) to "A-" (Excellent). This rating action follows over Nov. 23, 1992 action, when the rating was placed under review with short-term negative implications, pending further settlement of claims related to Hurricane Andrew and evaluation of the group's announcement of a major restructuring.
 The group expects the hurricane to generate approximately $90 million of gross losses, $50 million after reinsurance. This will place the year-end 1992 policyholders' surplus of the group at approximately $35 million to $40 million, a decline of almost 50 percent from the year-end 1991 level of $69 million. Consolidated policyholders' surplus reported for Sept. 30, 1992 was $41.7 million.
 As part of the group's restructuring, it has begun pulling out of Florida and several other states. The Florida Department of Insurance approved a withdrawal plan Oct. 27 for the group that calls for non- renewal of all business (without claims) beginning Jan. 1, 1993. Remaining business will be canceled mid-term using 45-day notices, effective May 1 1993. Within the past two months the group also had withdrawal plans approved by New Jersey, New York, North Carolina, Connecticut, Pennsylvania and Virginia. Withdrawal from all of these states except New Jersey is expected to be completed by Dec. 31, 1993, while the pullout from New Jersey is scheduled to be completed by Jan. 31, 1994.
 In addition, a quota share reinsurance agreement was put in place Sept. 30, 1992. This arrangement, along with the withdrawal agreements, are part of an ongoing business plan designed by management to maintain a 1.6-to-1 ratio of net premium writings to surplus.
 -0- 12/15/92
 /NOTE TO EDITORS: For a copy of "Best's Nine-Month Rating Monitor," contact Christina Stein, public relations, 908-439-2200, X5642./
 /CONTACT: Christina Stein, A.M. Best, 908-439-2200, x5642/


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Date:Dec 15, 1992
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