S&P Affirms Halcyon Insurance Co. `AApi' FSR

    NEW YORK--Standard & Poor's--March 5, 2001-- Standard & Poor's today affirmed its double-'Api' financial strength rating on Halcyon Insurance Co.
    The rating is based on the company's participation in a reinsurance agreement with an affiliate, Progressive Casualty Insurance Co. (financial strength rating double-'Api'), to which it cedes 90% of all premiums, loss and loss adjustment expense, and underwriting expense. The two companies also have a joint management services agreement.
    Both companies are wholly owned by The Progressive Corp. , an insurance holding company domiciled in Ohio (counterparty credit rating single-'A'-plus), of which the combined operations form the fourth largest writer of private passenger auto and personal-use vehicle insurance (motorcycles, recreational vehicles, and snowmobiles) in the U.S, with reported surplus of $2.2 billion at year-end 2000.
    Halcyon Insurance Co. (NAIC:16322) mainly writes private passenger auto insurance, and its products are distributed primarily through independent general agents. Headquartered in Mayfield Village, Ohio, and licensed in 31 states and the District of Columbia, it derives three-quarters of its total revenue from Ohio, Oregon, Kentucky, Nevada and Washington. The company began business in 1987.
    Net premiums written increased 166.8% in 1999 to $10.0 million, while surplus increased 51.9% to $12.3 million. The $4.2 million gain in surplus comprised a $5.4 million net remittance from its parent, The Progressive Corp., offset by a $0.7 million loss in net income and a $0.5 million decrease in the company's nonadmitted assets.
    Ratings with a 'pi' subscript are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings.
    Ratings with a 'pi' subscript generally are not modified with "plus" or "minus" designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said.--CreditWire.