Fitch Keeps Watch On Atlantic Mutual
NU Online News Service, Aug. 25, 4:04 p.m. EDT?Fitch Ratings said it is keeping a close watch on Atlantic Mutual Companies, a New York-based insurer which is in the midst of a capital-raising initiative.
Atlantic Mutual is currently under Fitch's "Rating Watch Negative" status. This "Rating Watch", Fitch noted, applies to the "Triple-B" insurer financial strength ratings of the Atlantic Mutual Companies, as well as the "Double-B" surplus note rating for its Atlantic Mutual Insurance Company.
Fitch expressed its concern that, based on its own modeling, Atlantic Mutual's reserves–for both asbestos claims and recent accident years–may be deficient. The agency also speculated that without enough new capital, Atlantic Mutual's ratings from peer rating agencies could stumble to "uncompetitive levels."
The ratings agency also added that Atlantic Mutual's "timely execution of the capital-raising initiative" is critical to the insurer's ability to hold its current Fitch ratings.
On a positive note, Fitch pointed out that the insurer has already made some progress–the company has already raised some $15 million by issuing new surplus notes so far this year. Atlantic Mutual has also started a "ground-up study" of its asbestos liabilities, Fitch said, although the preliminary results of the study suggest a range of reserve deficiency which is "somewhat less than Fitch's estimate."
The New York-based Fitch said it would resolve its "Rating Watch" status when Atlantic Mutual completes its capital-raising initiative, scheduled for sometime next month. But if the insurer does not raise enough capital within that announced timeframe, Fitch warned, "the ratings would likely be lowered."
Atlantic Mutual is a property-casualty insurer offering commercial, marine and personal insurance.
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