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S&P Assigns Haulers Insurance Co. 'BBBpi' Rating

27 November 2000

S&P Assigns Haulers Insurance Co. 'BBBpi' Rating

    NEW YORK, Nov. 27 Standard & Poor's today assigned its
triple-'Bpi' financial strength rating to Haulers Insurance Co. (Haulers).
    The rating action reflects the company's extremely strong capitalization,
good surplus growth, and adequate reinsurance protection. Limiting factors
include slightly volatile earnings and loss reserve development.
    Based in Columbia, Tenn., Haulers (NAIC: 3155) writes mainly private
passenger auto liability and auto physical damage, with an additional
specialization in personal auto and commercial auto. The company's business
lies within its major states of operation (Tennessee, Virginia, and Missouri)
and its products are distributed primarily through independent general agents.
The company, which began business in 1986, is licensed in Alabama,
Mississippi, Missouri, North Carolina, and Tennessee. Majority ownership of
the company remains with the directors James H. and Nancy Walker (41%) and
Leroy Gibson (20%).
    Major Rating Factors:
    -- At year-end 1999, capital adequacy as measured by Standard & Poor's
       capital adequacy model was extremely strong, at more than 300%. The
       company's surplus, which stood at $11.6 million at year-end 1999, has
       grown at a compounded annual rate of 12% since 1992.
    -- Although the company's geographic and product line concentration is
       high, it is adequately protected on a net basis from catastrophes and
       storm-related losses by reinsurance treaties. In addition, management
       is making gradual progress in expanding the company's presence outside
       Tennessee.
    -- Operating performance has been good with a five-year return on
       revenue from 1995-1999 at 7.9%. The returns have been favorable yet
       volatile with, for example, return on revenue ranging from 3.2% to
       11.6% since 1995, a limiting factor.
    -- The company's two-year development of reserves has been slightly
       volatile. The ratios have ranged from 5.2% redundant (negative
       development) to 6.2% deficient over the last five years with
       redundancies in four of the five years.

    Ratings 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. Ratings with a 'pi'
subscript 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