S&P Affirms Global Surety & Insurance Co 'BBpi' FSR

Apr 13, 2001, 01:00 ET from Standard & Poor's

    NEW YORK, April 13 /PRNewswire/ -- Standard & Poor's today affirmed its
 double-'Bpi' financial strength rating on Global Surety & Insurance Co.
 (Global Surety).
     The rating action reflects the company's aggressive investments, limited
 business scope, and volatile premiums.  These factors are partially offset by
 the company's adequate capitalization.
     Headquartered in Omaha, Neb., Global Surety (NAIC: 11304) writes contract
 surety insurance.  Business in the company's major states of operations --
 Arizona, California, and Colorado -- constitute over 99% of its total revenue,
 and its products are distributed primarily through independent general agents.
 Global Surety, which began business in 1958, is ultimately owned by Peter
 Kiewit Sons' Inc., a publicly held construction company.
     Major Rating Factors:
 
     *     The company's 1999 unaffiliated common stock leverage is high at
           84.5% of policyholders' surplus.  More than 30% of the company's
           invested assets are invested in interest-rate sensitive
           collateralized mortgage obligations and loan-backed bonds.
     *     The company's business scope is considered limited.  As of September
           2000, surplus grew to $27.5 million, or about 13% from year-end
           1999.  Surplus stood at $24.4 million at year-end 1999 and total
           1999 net premiums written amounted to $4.7 million.
     *     The company's historical instability in premium revenues limits the
           rating.  Year-to-year changes in net premiums written have varied
           from negative 44.1% to positive 85.5% since 1994.
     *     At year-end 1999, capital adequacy, as measured by Standard & Poor's
           model, was considered appropriate for the rating level.  It should
           be noted, however, that capital growth has been limited in the past
           by large dividends paid to the parent.
 
     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.
 
 

SOURCE Standard & Poor's
    NEW YORK, April 13 /PRNewswire/ -- Standard & Poor's today affirmed its
 double-'Bpi' financial strength rating on Global Surety & Insurance Co.
 (Global Surety).
     The rating action reflects the company's aggressive investments, limited
 business scope, and volatile premiums.  These factors are partially offset by
 the company's adequate capitalization.
     Headquartered in Omaha, Neb., Global Surety (NAIC: 11304) writes contract
 surety insurance.  Business in the company's major states of operations --
 Arizona, California, and Colorado -- constitute over 99% of its total revenue,
 and its products are distributed primarily through independent general agents.
 Global Surety, which began business in 1958, is ultimately owned by Peter
 Kiewit Sons' Inc., a publicly held construction company.
     Major Rating Factors:
 
     *     The company's 1999 unaffiliated common stock leverage is high at
           84.5% of policyholders' surplus.  More than 30% of the company's
           invested assets are invested in interest-rate sensitive
           collateralized mortgage obligations and loan-backed bonds.
     *     The company's business scope is considered limited.  As of September
           2000, surplus grew to $27.5 million, or about 13% from year-end
           1999.  Surplus stood at $24.4 million at year-end 1999 and total
           1999 net premiums written amounted to $4.7 million.
     *     The company's historical instability in premium revenues limits the
           rating.  Year-to-year changes in net premiums written have varied
           from negative 44.1% to positive 85.5% since 1994.
     *     At year-end 1999, capital adequacy, as measured by Standard & Poor's
           model, was considered appropriate for the rating level.  It should
           be noted, however, that capital growth has been limited in the past
           by large dividends paid to the parent.
 
     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.
 
 SOURCE  Standard & Poor's