S&P Affirms Unigard Ins Co, Rltd Pool Mmbrs `Api' FSR
NEW YORK--Standard & Poor's--April 6, 2001-- Standard & Poor's today affirmed its single-'Api' financial strength ratings on Unigard Insurance Co. and its related pool members (see list).Key rating factors include extremely strong capitalization and solid operating results, partially offset by declining premium revenues and volatility in its loss reserve development.
Based in Bellevue, Wash., the company mainly writes private passenger auto, commercial auto, homeowners and commercial multiperil insurance, distributed primarily through independent general agents. Unigard Insurance Co. (NAIC:25747), which began business in 1960, is licensed in 25 states. This company is a member of the enterprises nationally known as the Unigard Insurance Group (UIG), which is independently operated within the Credit Suisse group of companies (OTC:CSGKY), one of the world's largest financial services enterprises.
Major Rating Factors:
| -- | As of September 2000, the policyholders' surplus increased to $188.2 million (or 4%) from $181.6 million at year-end 1999. Capitalization was extremely strong at year-end 1999, as indicated by Standard & Poor's capital adequacy ratio of 222.6%. However, statutory surplus decreased 22.8% to $181.6 million from $235.2 million in 1998, driven primarily by the extraordinary $60 million cash dividend to retire Unigard Incorporated's preferred stock. |
| -- | Operating performance has been good, with the time-weighted ROR from 1996-1999 at 8.0%. At the end of third-quarter 2000, the company reported a gain of $5.2 million compared with a gain of $12.7 million for the same time period in the prior year (net change is down $7.5 million). Full-year 1999 net income was $28.7 million. |
| -- | The company has a history of declining in its premium revenues volume. |
| -- | The company's two-year reserve development ratio has been volatile. |
The reported ratios have ranged from 10.3% redundant to 6.0% deficient in the last five years.
-- The company's 1999 unaffiliated common stock leverage is
moderately high at 54.2% of policyholders' surplus, a rating
factor.
The single-'Api' financial strength rating is affirmed for the following members of the interaffiliated pool: Unigard Insurance Co. (86%); Unigard Indemnity Co. (NAIC:25798; 10%); and Federated American Insurance Co. (NAIC:11096; 4%).
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.
RATINGS AFFIRMED Unigard Insurance Co. Unigard Indemnity Co. Federated American Insurance Co. Financial strength rating Api