Atlantic Mutual Downgraded by A.M. Best
NU Online News Service, Oct. 7, 3 :54 p.m. EDT?A.M. Best Co. said it had downgraded the financial strength rating of The Atlantic Mutual Companies to "B-plus-plus" (Very Good) from "A-minus" (Excellent).
The Oldwick, N.J.-based rating agency, in addition to the financial strength downgrade, reduced the debt rating of Atlantic Mutual's existing $100 million 8.15 percent surplus notes due Feb. 2028 to "double-B-plus" from "triple-B."
"We are exploring a wide variety of options designed to increase our financial flexibility," said Atlantic Mutual spokesperson Peter Scott. However, Mr. Scott added that at this time he was not in a position to say what those options are.
On Sept. 25, Atlantic Mutual sold its ocean cargo and a portion of its inland marine business to Hartford, Conn.-based Travelers Property Casualty Corp.
The insurer's independent agents have expressed "normal, honest and expected level of concern" about the rating downgrades, Mr. Scott noted. He said that the company has a strong relationship with its agents and the agents' attitude is, "how do we work through this."
Atlantic Mutual in a statement expressed "disappointment" over Best's decision. The statement noted the New York-based insurer's "important accomplishments in strengthening capitalization, earnings and quality of surplus."
Those accomplishments, the insurer's statement pointed out, include eliminating fees associated with soft capital, lowering operating expenses and adding to income with a higher bond allocation.
According to a statement by Best, the downgrades reflect the variance between the expected and actual levels of new capital raised by Atlantic Mutual, its historically weak underwriting and operating performance, and continued adverse prior-year loss reserve development.
Despite the rating downgrade, the group's capitalization "remains secure and underwriting results on more recent accident years appear to be improving," Best said.
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