S&P Affirms Auto Club Group Insurance Co 'Api' Rtg
18 October 1999
S&P Affirms Auto Club Group Insurance Co 'Api' Rtg
NEW YORK--Oct. 15, 1999--Standard and Poor's affirmed its single-'Api' financial strength rating on Auto Club Group Insurance Co. (ACGIC).ACGIC is a property and casualty insurer offering coverage for members of the Auto Club of Michigan, AAA Wisconsin, Inc., and other affiliated organizations. The company offers personal lines coverage to auto club members through various group programs, marketing products through credit unions or employer groups. It also markets its products through credit unions or employer groups. ACGIC, headquartered in Dearborn, MI, is licensed in Michigan and Wisconsin and commenced operations in 1969.
ACGIC is a wholly owned subsidiary of Auto Club Insurance Association (ACIA) and together with Castle Insurance Co. forms the Auto Club of Michigan Insurance Group. The Group is a member of the American Auto Association (AAA), a leading automotive and travel service provider. ACIA, as the lead company in the interaffiliated pooling agreement, assumes all premiums, losses and expenses, and cedes 5% of the business to ACGIC and another 5% of the business to Castle Insurance. In addition, a common management agreement is in place between the companies.
Major Rating Factors:
-- Geographic concentration for the interaffiliated pool is high, with 99% of its direct business written in Michigan. Geographic concentration can expose a company to regulatory and competitive risk.
-- Reserve development has displayed more volatility than for higher rated companies.
-- Liquidity for the interaffiliated pool is good at 114%, as measured by Standard and Poor's liquidity model.
-- Operating performance for the interaffiliated pool is strong, with the average return on revenue from 1993 to 1998 at 8%.
-- Capitalization for the interaffiliated pool is extremely strong in excess of 300%, as measured by Standard and Poor's capital adequacy model.
'Pi' ratings, denoted 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. 'Pi' ratings 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
Copyright 1999, Standard & Poor's Ratings Services