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ALLSTATE INSURANCE GROUP AFFIRMED BY THE A.M. BEST COMPANY

 OLDWICK, N.J., Dec. 3 /PRNewswire/ -- Effective immediately, A.M. Best Company has affirmed the "A-" (Excellent) Best's Rating of the Allstate Insurance Group (property/casualty). The rating affirmation applies to eight members of the group, led by Allstate Insurance Company, Northbrook, IL.
 Following discussions with Allstate management, an evaluation of the group's capitalization and a review of insurance legislation recently enacted in Florida (which includes establishing a state- run catastrophe fund and permitting limited non-renewal activity), A.M. Best is satisfied that the uncertainty associated with Allstate's ability to reduce its hurricane exposure in the state from approximately $4 billion to $1 billion will be achievable over the next two years. This reduction in the group's hurricane exposure was critical for the group to maintain excellent financial stability and its "A-" (Excellent) rating.
 Specifically, the Florida catastrophe fund will pay 75% of claims from a hurricane when those losses reach twice an insurer's annual gross premiums written for property insurance in Florida. The catastrophe fund will be financed by a combination of a surcharge on property policyholders and premiums paid by insurance companies, which should raise approximately $500 million a year. The fund will be administered by a state-appointed board, which will have broad authority to issue bonds through local governments, buy reinsurance or borrow money to meet current and future claims.
 This catastrophe coverage, in conjunction with voluntary terminations of homeowners policies, a provision in the legislative package that allows companies to cancel or non-renew modest amounts homeowners business, and a provision that caps insurers' exposure to losses from residual markets, should enable Allstate to reduce its hurricane exposure in Florida to nearly $1 billion over a two-year period.
 "This legislation will enable Allstate to reduce its hurricane exposure to a prudent level in Florida, yet affect only a limited number of policyholders," said John H. Snyder, senior vice president of Best's property/casualty division. "It also is an excellent illustration of how insurers and state regulators can work together to resolve problems within the insurance marketplace."
 Last spring, Allstate announced plans to cancel or non-renew about 300,000 homeowners policies in Florida because of its excessive hurricane exposure, which will no longer be necessary.
 -0- 12/3/93
 /CONTACT: Rhonda J. Ruch of A.M. Best Company, 908-439-2200, Ext. 5684/


CO: Allstate Insurance Group ST: Illinois IN: INS SU: RTG

PS -- NY016 -- 0154 12/03/93 10:39 EST
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Publication:PR Newswire
Date:Dec 3, 1993
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