S&P Affirms `BBBpi' FSR on Concord General Mutual Ins
6 October 2000
S&P Affirms `BBBpi' FSR on Concord General Mutual Ins
NEW YORK--Standard & Poor's--Oct. 6, 2000-- Standard & Poor's today affirmed its triple-'Bpi' financial strength rating on Concord General Mutual Insurance Co. and its 100% reinsured affiliates: Green Mountain Insurance Co. Inc. (NAIC: 20680), Peoples Service Insurance Co. (NAIC: 15625), State Mutual Insurance Co. (ME) (NAIC: 16020), Sunapee Mutual Fire Insurance Co. (NAIC: 28479) and Vermont Accident Insurance Co. Inc. (NAIC: 13110).Key rating factors include extremely strong capitalization and good liquidity, offset by weak earnings and volatile premium revenue.
Based in Concord, N.H., this group writes mainly private passenger auto and homeowners insurance. All of the company's business lies within New Hampshire, Maine and Vermont. Its products are distributed primarily through independent general agents. The company, which began business in 1928, is licensed in Maine, New Hampshire, South Carolina, and Vermont and is a member of Concord Group Insurance Cos., a large insurance group with a surplus of $149.7 million at year-end 1999.
Major Rating Factors:
| -- | Capital adequacy, as measured by Standard & Poor's capital adequacy model, was extremely strong at year-end 1999. The group's surplus, which stood at $149.7 million at year-end 1999, has grown at a compound annual rate of 14.0% since 1992. The gain in surplus of $6.8 million from 1998 was comprised of $8.4 million in net income, offset by $0.8 million in dividends to stockholders, $0.5 million in net unrealized capital losses, and a negative $0.3 million change in the group's excess statutory reserves. |
| -- | The Standard & Poor's liquidity ratio is good at 138.7%. |
| -- | The group's five-year average ROR of 0.5% and the Standard & Poor's earnings adequacy ratio of 21.6% are both marginal. The company's return on equity is also below the median of companies receiving a higher rating. The gain in net income of $7.2 million in 1999 compared with the prior year was composed primarily of a gain of $10.1 million in net underwriting income and $0.8 million in net realized capital gains, offset by an increase of $3.7 million in federal income tax incurred. Auto physical damage was principally responsible for the rise in net income, with a recorded loss ratio improvement of 10.1 points from prior year that resulted in a 1999 loss ratio of 74.5%. |
| -- | The group's erratic premium revenue is viewed as a limiting factor. Yearly changes in premium levels have varied from negative 8.5% to positive 27.6% during the past five years. |
The rating for the company (NAIC: 20672) is based on the 1999 statutory consolidated financial results of the Concord Group Insurance Cos.
'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