Moody's Investors Service today became the third ratings firm to further downgrade the financial strength rating of Atlantic Mutual Insurance Company.
Moody's in New York said it is withdrawing the Madison, N.J.-based company's ratings after adverse developments, including inability to pay interest on surplus notes.
A.M. Best Company and Standard and Poor's Rating Service earlier this month downgraded the firm, and Best said the carrier asked to be unrated after it gave the company a negative outlook.
A Moody's spokesman, Jeff Berg, would not comment on whether the company had asked to be unrated.
Moody's took the insurer's surplus note rating to "C" from "Caa3″ and dropped the company's and its subsidiaries' financial strength rating to "B3″ from "B1″ with a negative outlook.
Mr. Berg said both ratings will be subsequently withdrawn for business reasons.
According to Moody's standard operating policy, the firm will withdraw a rating "for an issuer or an obligation for reasons unrelated to the adequacy of information or bankruptcy or reorganization status of the credit. When this occurs, Moody's will balance the market need for a rating against the resources required to maintain and monitor a rating."
Moody's said the rating downgrades reflect the company's apparent failure to pay interest on its surplus notes (which were due Aug. 15), substantial uncertainty over the company's future business prospects, the risk of further adverse reserve development, and a further weakening of the company's statutory surplus position.
Atlantic Mutual on March 10 saw Moody's downgrade the company's surplus note rating to "Caa3″ from "B1″ and the insurance financial strength rating of Atlantic Mutual and it subsidiaries to "B1″ from "Baa3."
Elaborating on today's action, Moody's said the following ratings were downgraded and will be withdrawn:
o Atlantic Mutual Insurance Company–surplus notes to "C" from "Caa3;" insurance financial strength to "B3″ from "B1."
o Centennial Insurance Company–insurance financial strength to "B3″ from "B1."
o ALICOT Insurance Company–insurance financial strength to "B3″ from "B1."
Atlantic Mutual Insurance Company writes primarily personal lines insurance. For the six months ended June 30, the company reported a statutory net loss of $5 million and policyholders' surplus of $139.1 million.
Atlantic had no immediate response to a request for comment over the Moody's action.
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