DUFF & PHELPS: AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA CLAIMS PAYING ABILITY RATED 'A+'
CHICAGO, Nov. 9 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a "A+" (Single-A-Plus) claims paying ability rating to the American Bankers Insurance Company of Florida (ABIC). This high claims paying ability rating reflects the company's profitable results in its chosen market niche, high quality investment portfolio, and tight management control of operating risk. Partially offsetting these positives is the company's aggressive use of operating leverage. ABIC is the lead property and casualty company of the American Bankers Insurance Group, Inc.(ABIG), which through its subsidiaries, provides principally credit-related insurance products in the United States, Canada, and the Caribbean. ABIG is a publicly owned company with shares traded on the NASDAQ. ABIC had net written premium of $364 million during 1992, and policyholders' surplus was $134 million at yearend 1992. The total net written premium of all ABIG's domestic property and casualty operations during 1992 was $407 million, ranking it eighty-fifth in the United States in terms of premium volume. ABIG's operations also include American Bankers Life Assurance Company, a $532 million (assets at 12/31/92) life insurer. The claims paying ability of American Bankers Life Assurance Company is rated "AA-" (Double-A-Minus) by Duff & Phelps Credit Rating Co. Over the last five years ABIC's profitability has been excellent, with its combined ratio averaging 100.9 percent. The company continues to pursue a niche strategy of providing credit insurance products on a wholesale basis to major financial institutions, retailers and other entities which provide consumer financing as a regular part of their businesses. ABIC's business is concentrated in short tail property lines where policies typically pay the loan balance or the cost of repairing or replacing the insured's merchandise in the event of a loss due to a covered event. ABIC's credit bond business, which had produced adverse financial results, was discontinued in 1986. Litigation over bonds backed by installment loans on mobile homes has to date resulted in approximately $50 million in losses. ABIC had issued credit bond coverage for mobile home loans originated by a client that subsequently went bankrupt. Approximately 70 percent of the loans were pooled and pledged to secure bonds sold to various investors, in an aggregate principal amount of $115 million. The company has reached a settlement with investors who held nearly three-quarters of the original principal amounts of the bonds. Any further losses are not anticipated to have a material impact on the company's claims paying ability. In addition, as a result of the amount of losses suffered in the credit bond business, ABIC has put in place tight management controls to evaluate the profitability of each insurance program at prescribed intervals. Net premiums to policyholders' surplus was 2.7:1 at the end of 1992, compared with 2.1:1 at the end of the previous year. The company generally targets a ratio of 2.5:1. During 1992, net written premium increased 27.5 percent while policyholders' surplus remained flat, causing the premium to surplus ratio to exceed target levels. A large portion of the increased premium was from the assumption of a closed block of business during 1992, which resulted in 14.0 percent of the increase in net written premium. Policyholders' surplus growth was flat as a result of net income of $13.5 million being offset by dividends to stockholders of $7.5 million and other declines in surplus equaling $5.4 million. ABIC's investment portfolio at December 30, 1993, consisted primarily of high quality fixed income investments and sinking fund preferred stocks. Of the total portfolio, fixed income investment represented 89.1 percent and preferred stocks 5.0 percent. Common equities represented 5.1 percent of the total portfolio. -0- 11/9/93 /CONTACT: Timothy A. Bienek, CFA, of Duff & Phelps Credit Rating Co., 312-368-3192/
CO: American Bankers Insurance Company of Florida ST: Florida IN: INS SU: RTG
MP -- NY055 -- 2205 11/09/93 10:56 EST
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|Date:||Nov 9, 1993|
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