Moody's Put Atlantic Mutual Ratings On Review
NU Online News Service, Sept. 8, 1:09 p.m. EDT?Moody's Investors Service said it has placed ratings of the Atlantic Mutual Companies on review for a possible downgrade, citing its concern regarding the insurer's capital strength.
This review, the New York-based ratings agency noted, will include the "Baa1″ insurance financial strength rating for Atlantic Mutual's pooled insurance units, as well as the "Ba1″ rating for the insurer's $100 million worth of surplus notes due in 2028.
One of the areas that will be monitored by Moody's during the review period is the effect of possible reinsurance contract commutations under consideration by Atlantic Mutual, said Karen Davies, an analyst at Moody's.
Atlantic Mutual, Moody's explained, had boosted its reliance on reinsurance to support its capital base in 2001, prompted by a prolonged soft market, losses from the 9/11 terror attack and falling equity markets. But the insurer is now considering unwinding some of these reinsurance contracts to help replace its soft capital with more permanent forms of capitalization.
But such reinsurance commutations, Moody's warned, could reduce statutory surplus and related solvency ratios.
Additionally, Moody's said it will also review other actions under consideration by Atlantic Mutual, including possible capital-raising initiatives and placing some business into runoff.
Headquartered in New York, Atlantic Mutual Companies offers commercial, personal and marine property-casualty insurance to individuals and businesses. In 2002, the company reported $17.7 million in net income and $754 million in sales.
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