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S&P Affirms Michigan Mutual Ins. Co. 'BBBpi' Rtg

22 October 1999

S&P Affirms Michigan Mutual Ins. Co. 'BBBpi' Rtg

    NEW YORK--Standard & Poor's--Oct. 21, 1999-- Standard & Poor's today affirmed its triple-'Bpi' financial strength rating on Michigan Mutual Insurance Co.
    Michigan Mutual Insurance Co. is a mutual company based in Farmington Hills, Mich. and licensed in all states and the District of Columbia.
    Its major lines of business are workers' compensation, commercial multi-peril and commercial auto liability insurance. It is a member of Amerisure Companies, a large insurance group. The company, which distributes its products primarily through independent general agents, commenced operations in 1912.
    As a consequence of an interaffiliate pooling arrangement with Amerisure Insurance Co., under which the company receives 70.0% of the pool, Michigan Mutual Insurance Co. is assigned the 'BBBpi' rating.

     Major Rating Factors:

--   Capitalization is extremely strong, as indicated by Standard &
     Poor's capital adequacy ratio of 218%.

--   Operating performance is modest, with a risk-adjusted return on
     revenue of 5.0%. In addition, the Standard & Poor's earnings
     adequacy ratio is weak, at 80.6%.

--   The company's liquidity ratio is also considered vulnerable at
     103%.

--   The company has more reinsurance recoverables and agents'
     balances relative to surplus than most higher rated insurance
     companies.

    '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