S&P Assigns Phoenix Indemnity Insurance Co. `Bpi' Rtg
18 September 2000
S&P Assigns Phoenix Indemnity Insurance Co. `Bpi' Rtg
NEW YORK--Standard & Poor's--Sept. 18, 2000-- Standard & Poor's today assigned its single-'Bpi' financial strength rating to Phoenix Indemnity Insurance Co. (Phoenix Indemnity).Key rating factors include the company's membership in Millers American Group Inc. , a midsize insurance group with 1999 surplus in excess of $80 million, along with the company's weak operating returns, potential interest-rate exposure and geographic concentration, somewhat offset by strong capitalization.
Phoenix Indemnity mainly writes private passenger auto insurance, with a specialization in nonstandard auto, and its products are distributed primarily through independent general agents. Based in Omaha, Neb., (domiciled in Arizona) and licensed in 24 states, the company derives more than 80% of its business from its major states of operation -- Arizona, New Mexico, Utah, Nevada and Kentucky. It began business in 1988.
The company is 100%-owned by Millers Holding Corp. which is, in turn, wholly owned by The Millers Insurance Co. Phoenix Indemnity was previously a part of Acceptance Insurance Companies Inc. , which sold the company in September 1999.
Major Rating Factors:
| -- | The rating is limited to the implied single-'Bpi' financial strength rating on Millers American Group Inc., of which Phoenix Indemnity is a recent unconsolidated member. |
| -- | Operating performance has been weak, with the time-weighted return on revenue from 1994 to 1999 at negative 0.5%. Further, the company's returns have been volatile with, for example, return on assets ranging from minus 7.9% to plus 5.9% in the last five years. |
| -- | The company (NAIC:34037) has potential interest-rate risk, with the ratio of collateralized mortgage obligations and loan-backed bonds at 1.6 times surplus in 1999. |
| -- | The company's geographic and product-line concentration is high with respect to current capitalization. In 1999, 39.4% of direct premiums were from Arizona. |
| -- | Capitalization remained extremely strong at year-end 1999, as indicated by a Standard & Poor's capital adequacy ratio of 200.9%. The company was more leveraged than similar companies, with its net premiums written plus liabilities to surplus at 5.4 times. |
Other members of Millers American Group Inc. include The Millers Insurance Co., The Millers Casualty Insurance Co. (TX) and The Millers Direct Insurance Co.
'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.