Unistar Financial Services Corp., a Dallas-based financial services holding company, has filed an application with the Securities and Exchange Commission to withdraw its common stock listing from the American Stock Exchange and has announced that its chairman and chief executive officer has resigned.
The AMEX began a review of Unistars listing in July. (See NU, Sept. 6, page 11 for more details.)
AMEX representatives have advised the company that the exchange was considering delisting the common stock based on its review of the companys eligibility for continued listing, Unistar said in a statement.
The statement also said that the AMEX raised a number of issues with the company. They included:
Whether transactions through which the company acquired U.S. Fidelity Holding Corp. involved related parties and whether those relationships were disclosed.
Whether the company appropriately valued a "customer list"its principal assetat $86 million.
Whether disclosure and valuation of the companys reinsurance license was complete.
Whether ownership interests and transactions in common stock of the company were accurately disclosed.
Morris Belzberg, a director of the company, will replace Marc Sparks, who resigned from his position as chairman. Jeffrey Nelson, president and chief financial officer, will fill Mr. Sparks former role as chief executive.
Unistar also announced that its wholly owned subsidiaries entered into a mutually agreed 1.32 Order by Consent with the Texas insurance department, effective Oct. 18. Article 1.32 of the Texas Insurance Code gives the insurance commissioner certain authority when an insurers financial condition is or might be hazardous to the public.
First American Buying Five Star Holdings, Inc.
The First American Financial Corp., a real estate information services company and title insurer in Santa Ana, Calif., has agreed to acquire Five Star Holdings, Inc. of Irvine, Calif., for an undisclosed amount.
Five Star Holdings is an insurance holding company that underwrites, manages and places property-casualty insurance coverage throughout California, Arizona and Nevada.
"Among other things, this acquisition represents the prospect of utilizing the nations largest escrow and closing infrastructure to provide homeowners insurance through the real estate closing process," said Parker Kennedy, president of First American Financial.
Queensway Financial Holdings Ltd., a Toronto-based financial services holding company, announced that it plans to wind up the affairs of Paradigm Insurance Company with the cooperation and supervision of the Indiana Department of Insurance.
Queensway said it will retain full responsibility for the administration and resolution of all claims against Paradigm and its insureds.
Queensway management believes that it has established adequate reserves for all Paradigm claims and has assured the Indiana Insurance Department that all claims submitted by policyholders will be paid in the normal course, the company said.
Following the announcement, the A.M. Best Company in Oldwick, N.J., downgraded Paradigm from B++ (very good) to E (under state supervision), removing the rating from under review. Best noted that Queensways decision was a departure from the companys original plan to sell Paradigm upon the completion of the sale of its medical malpractice business and a loss portfolio transfer of existing underwriting liabilities.
The medical malpractice business was sold in July 1999 to a subsidiary of SCPIE Holdings Inc. of Los Angeles, Best said.
Separately, Queensway announced that it intends to sell a portion of its investments in the near future to reduce bank debt and restructure its investment portfolio. As a result, a portion of the portfolio held at the holding company level will be reclassified from long-term to short-term and written down to market value.
Estimating that the write-down will fall between $15 million and $20 million, the company said third-quarter operating results will be less than the companys historical average.
S&P Lowers Ratings
Of Old Republic
Standard & Poors in New York lowered debt ratings of Old Republic International Corp., an insurance holding company, and Old Republic Capital Corp., a subsidiary formed to issue commercial paper, as well as the debt and financial strength ratings of Old Republic General Insurance Group.
For insurers in the commercial lines insurance group, S&P brought the financial strength ratings down to "AA" from "AA-plus," changing the outlook to negative from stable.
S&P said the insurance groups earnings and cash flow results for year-end 1998 and the first six months of 1999 are very weak for rating levels, noting that general commercial lines pressures and increasing frequency and severity trends specific to three of its main operating companies are squeezing margins.
While capitalization will remain extremely strong for at least two years, S&P said the companies will be challenged in their efforts to re-price and re-underwrite business.
S&P noted that the p-c group benefits from other sources of incomein particular, from Republic Mortgage Insurance Company and Old Republic National Title Insurance Company. In a separate announcement, S&P said it raised its ratings for the title insurance group to "AA-minus" from "A-plus."
Midland Earnings Up For Third Quarter
Catastrophe losses did not prevent The Midland Insurance Company from reporting an 8 percent rise in operating earnings for the third quarter, the company announced.
Third-quarter net operating income for the specialty company based in Cincinnati, Ohio, was $6.7 million, or $0.71 per share, compared to $6.2 million, or $0.66 per share, last year.
The impact of Hurricane Floyd was $0.22 per share, according to John Hayden, Midlands president and chief executive officer. Together with other catastrophe losses, Mr. Hayden said that the impact to American Modern Insurance Group, a wholly owned subsidiary, was a "normal" third-quarter result. He added that exposure monitoring and reinsurance support enabled the company to minimize Floyds impact on results.
Midland also reported that American Moderns direct and assumed premiums grew 5.2 percent to $129 million, with manufactured housing premiums growing 8.6 percent.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 29, 1999. Copyright 1999 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.