S&P Affirms Underwriters Guarantee Insurance Co. 'Bpi' FSR

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

    NEW YORK, April 13 /PRNewswire/ -- Standard & Poor's today affirmed its
 single-'Bpi' financial strength rating on Underwriters Guarantee Insurance Co.
 (UGIC).
     The rating is based on limited product line and geographic
 diversification, weak operating performance, volatile reserve development, and
 an aggressive investment profile, somewhat offset by adequate capitalization.
     Headquartered in Miami, Fla., UGIC (NAIC: 21431) writes mainly private
 passenger auto liability and auto physical damage, with a specialization in
 nonstandard auto insurance. Florida constitutes almost 99% of its total
 revenue and its products are distributed exclusively through Specialty
 Insurance Underwriters, a managing general agency. UGIC, which began business
 in 1986, is licensed in Florida and Georgia and is owned by the Ricciardelli
 Family, private individuals from Florida.
     Major Rating Factors:
      -- The company's business scope is considered limited as a result of its
 product line and geographic concentration. Surplus stood at $5.9 million at
 year-end 1999, and total 1999 net premiums written amounted to $9.4 million.
 Currently, 98.7% of net premiums written are in Florida. The company is
 susceptible, on a gross basis, to catastrophes and storm-related losses.
      -- Operating performance has been weak, with a five-year average ROR of
 negative 3.2%.
      -- The company's two-year reserve development ratio has been volatile,
 averaging 10.6% since 1995. The reported ratios have ranged from 17.3%
 redundant (negative development) to 38.5% deficient in the last five years.
      -- More than 28% of the company's invested assets are invested in
 interest-rate sensitive collateralized mortgage obligations and loan-backed
 bonds. In 1999, more than 29% of surplus was invested in unaffiliated common
 stocks.
      -- Capitalization, as indicated by Standard & Poor's capital adequacy
 model, was appropriate for the rating level at year-end 1999. However, the
 NAIC risk-based capital ratio is below the industry median at 190.2%. In
 addition, the company has about $2 million in surplus notes that comprise 34%
 of surplus as of year-end 1999.
     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
 single-'Bpi' financial strength rating on Underwriters Guarantee Insurance Co.
 (UGIC).
     The rating is based on limited product line and geographic
 diversification, weak operating performance, volatile reserve development, and
 an aggressive investment profile, somewhat offset by adequate capitalization.
     Headquartered in Miami, Fla., UGIC (NAIC: 21431) writes mainly private
 passenger auto liability and auto physical damage, with a specialization in
 nonstandard auto insurance. Florida constitutes almost 99% of its total
 revenue and its products are distributed exclusively through Specialty
 Insurance Underwriters, a managing general agency. UGIC, which began business
 in 1986, is licensed in Florida and Georgia and is owned by the Ricciardelli
 Family, private individuals from Florida.
     Major Rating Factors:
      -- The company's business scope is considered limited as a result of its
 product line and geographic concentration. Surplus stood at $5.9 million at
 year-end 1999, and total 1999 net premiums written amounted to $9.4 million.
 Currently, 98.7% of net premiums written are in Florida. The company is
 susceptible, on a gross basis, to catastrophes and storm-related losses.
      -- Operating performance has been weak, with a five-year average ROR of
 negative 3.2%.
      -- The company's two-year reserve development ratio has been volatile,
 averaging 10.6% since 1995. The reported ratios have ranged from 17.3%
 redundant (negative development) to 38.5% deficient in the last five years.
      -- More than 28% of the company's invested assets are invested in
 interest-rate sensitive collateralized mortgage obligations and loan-backed
 bonds. In 1999, more than 29% of surplus was invested in unaffiliated common
 stocks.
      -- Capitalization, as indicated by Standard & Poor's capital adequacy
 model, was appropriate for the rating level at year-end 1999. However, the
 NAIC risk-based capital ratio is below the industry median at 190.2%. In
 addition, the company has about $2 million in surplus notes that comprise 34%
 of surplus as of year-end 1999.
     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