S&P Assigns Dobco Life Insurance Co. 'BBBpi' FSR
31 August 2000
S&P Assigns Dobco Life Insurance Co. 'BBBpi' FSR
NEW YORK--Standard & Poor's--Aug. 31, 2000-- Standard & Poor's today assigned its triple-'Bpi' financial strength rating to Dobco Life Insurance Co. (Dobco).Key rating factors include the company's strategic importance to its parent, The American Road Insurance Co. , and extremely strong capital and liquidity positions, which are partially offset by Dobco's weak and volatile operating results.
Based in Dearborn, Mich., Dobco (NAIC:86851) began operations in 1977 and is licensed only in Arizona. The company is wholly owned by The American Road Insurance Co. (triple-'Bpi' financial strength rating), a subsidiary of Ford Motor Credit Co. (single-'A' counterparty credit rating). Dobco Life has no direct business. The principal products assumed by Dobco are credit life and disability coverage offered to retail purchasers of vehicles financed at Ford dealerships. Vehicle dealers who generate the business that is assumed by Dobco from Vista Life Insurance Co. (triple-'Bpi' financial strength rating) own shares of participating stock.
Standard & Poor's believes Dobco is strategically important to its parent. Therefore, group support is a rating factor.
Major Rating Factors:
| -- | Capital adequacy, as measured by Standard & Poor's capital adequacy model, is more than 300%, which is extremely strong. Total adjusted capital was $3.8 million at year-end 1999 versus $3.3 million in 1998, an increase of 13.3%. |
| -- | The company has extremely strong liquidity, with a liquidity ratio in excess of 260%. |
| -- | The company has displayed an irregular pattern of operating earnings that, in conjunction with its current capital base of $3.8 million, limits the rating. Since 1994, returns varied from 3.3%-11.8%. |
| -- | The company has a limited business scope, concentrating primarily in the reinsurance of credit life and disability insurance. In addition, the company's net premium income declined 16% to $1.1 million in 1999. |
'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.