S&P Affirms Transport Insurance Co. 'Bpi' Rating
NEW YORK--Standard & Poor's--Oct. 4, 2001-- Standard & Poor's today affirmed its single-'Bpi' financial strength rating on Transport Insurance Co.The rating is based on the company's geographic and product line concentration and volatility in its operating results.
Based in Cincinnati, Ohio the company (NAIC:33014) primarily wrote long-haul trucking and workers' compensation, which is currently in run-off. The company currently writes private passenger auto liability and auto physical damage insurance, which is 100% ceded to an affiliate. The company, which began business in 1950, is licensed in 48 states and the District of Columbia and is a member of American Financial Group Inc. a large insurance group specializing in private passenger auto, specialty property/casualty insurance, tax-deferred annuities, and certain life and health insurance.
Major Rating Factors:
| -- | The company's geographic and product line concentration is high with respect to current capitalization. At year-end 2000, 54.6% of direct premiums were in California and 41.3% in Michigan. |
| -- | The company has no retained earnings. At year-end 2000, unassigned surplus was negative $64.5 million. The ratio of unassigned fund to assets, a measure of retained earnings, is negative 75.5% which, together with a liquidity ratio of 85.4%, limits the company's rating. |
| -- | The combination of high one-year loss development (46% of surplus) and high earnings volatility is a limiting factor. |
| -- | At year-end 2000, capitalization remained extremely strong, as indicated by Standard & Poor's capital adequacy ratio of 286.5%. The company's surplus, which stood at $17.2 million at year-end 2000, has grown at a compound annual rate of 1.5% since 1993. However, in 2000, the company was more leveraged than its peers with its liabilities to surplus at 4 times. |
Although the company is a member of American Financial Group Inc., the rating does not include additional credit for implied group support.
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.