NEW YORK--(BUSINESS WIRE)--June 25, 2003--Standard & Poor's-Standard & Poor's Ratings Services said today that it lowered its counterparty credit and financial strength ratings on Atlantic Mutual Insurance Co. (AMIC), Centennial Insurance Co., Atlantic Specialty Insurance Co., and Atlantic Lloyds Insurance Co. of Texas (collectively referred to as Atlantic Mutual) to 'BBB' from 'BBB+' because of Atlantic Mutual's weak underwriting performance, as demonstrated by its adverse reserve development over the past two years, reduced investment income, increased reliance on financial reinsurance to maintain surplus, the potential for further reserve strengthening, and limited financial flexibility. Partly offsetting these concerns are signs of improvement in the profitability of business written in the past couple of years, a high-quality investment portfolio, and strong capitalization.
Standard & Poor's also said that it lowered its surplus note rating on AMIC to 'BB+' from 'BBB-'.
The outlook on all these companies is negative.
"Atlantic Mutual is pursuing various initiatives to reduce its reliance on financial reinsurance for surplus relief and improve operating results," noted Standard & Poor's credit analyst John Iten. If the company is not able to execute these initiatives fully, the ratings could be lowered further.
Atlantic Mutual is predominantly a commercial lines writer for middle-market accounts, with commercial lines accounting for 85% of direct premiums ($1.06 billion in 2002). The company is ranked 18th in ocean marine, 32nd in commercial multi-peril, 39th in inland marine, and 49th in workers' compensation based on 2001 net premiums written. Personal lines, where the company's focus is on affluent customers, generated the remaining 15% of direct premiums.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Credit Ratings Actions.
Copyright 2003, Standard & Poor's Ratings Services