ICAHN BUYS MORE RELIANCE DEBT
Financier Carl Icahn has purchased $10.5 million of the defaulted notes and $20 million of the secured bank debt of Reliance Group Holdings Inc. In a press release, Icahn also said he plans to end the tender offer of High River LP for up to $40 million more of the notes. He will buy all of the notes tendered and not withdrawn as of that time, he said. Icahn is seeking to block any bankruptcy restructuring he doesn't like through the purchase plan. He needs voting control of one-third of the notes to have a say in any Reliance bankruptcy restructuring.
ROOM FOR EXPRESSION
The California Department of Insurance (CDI) insists the goal of a proposed emergency regulation is to make sure that insurers use plain English on all posted market conduct exams, but according to the NAII, the use of "eighth-grade English" would not provide consumers with a balanced report. The NAII is urging the Office of Administrative Law to reject the regulation that would implement a portion of SB 1805, a bill requiring the insurance commissioner to post copies of adopted market conduct exams on the CDI's website. SB 1805, which passed the Legislature last year, granted public online access to these reports, but it also gave insurers the right to fully respond with comments so that consumers would have both sides of the story. Examination reports involve technical rating and underwriting matters, complex claims procedures and complicated legal issues that may need lengthy explanation. In its proposed regulation, however, the CDI is attempting to regulate the length and content of insurer comments, requiring insurers to use simple language and setting an arbitrary 20-page limit, according to the NAII. No such restriction is imposed on the CDI's language in the report.
FFIC Downgraded
Following sharp reserve strengthening on the California contractors business of First Financial Insurance Co. (FFIC), its financial strength rating (FSR) was lowered from "Api" to "BBBpi" by Standard & Poor's (S&P). The rating action is also applicable to The Burlington Ins. Co., a wholly owned affiliate. Licensed in 44 states and the District of Columbia, Burlington, N.C.-based FFIC writes mainly general liability on an occurrence basis and commercial multiperil with a focus on small business. It also writes on a non-admitted or surplus lines basis in seven states. More than three-quarters of the company's total revenue is comprised of business in California, New York and Illinois.
HISCO Off CreditWatch
The "BBB+" long-term counterparty credit rating and insurer FSR on Hiscox Insurance Company Ltd. (HISCO) were withdrawn from CreditWatch with positive implications by S&P. The action placing the HISCO ratings on Watch Positive took place on Jan. 24, following an announcement that the Chubb Corp. of the U.S. and HISCO's parent company, Hiscox PLC, were in discussions regarding a possible acquisition of the latter. Those discussions have since terminated, resulting in the latest CreditWatch action. At the same time, S&P affirmed HISCO's ratings. The outlook is stable.
St. Paul Affirmed
Following an annual review of the ratings on St. Paul Cos. Inc., S&P affirmed its ratings on the organization and related entities. Outstanding ratings affirmed for SPC: counterparty credit, "A+"/Stable; senior debt, "A+"; commercial paper, "A-1". For USF&G Corp.: counterparty credit, "A+"/Stable; senior debt, "A+"; subordinated debt, "A". For MMI Capital Trust I, and USF&G Capital I, II and III: preferred stock, "A-". For St. Paul Ins. Co. of IL, St. Paul Lloyd's, Northbrook National Ins. Co., St. Paul Reinsurance Co. Ltd., St. Paul International Ins. Co. Ltd.; and United States Fidelity & Guaranty Life Ins. Co.: counterparty credit, "AA"/Stable; FSR, "AA." For Fidelity & Guaranty Life Ins. Co. and Thomas Jefferson Life Ins. Co.: FSR, "AA." For the members of the St. Paul Fire & Marine Ins. Co. Intercompany Pool: counterparty credit, "AA"/Stable; FSR, "AA."
American Community Downgraded
Subsequent to continued deterioration in American Community Mutual Insurance Co.'s surplus position, the FSR on the company was downgraded from "B-" to "C++" by A.M. Best Co. American Community recently entered into a series of modified coinsurance reinsurance transactions in an effort to satisfy regulatory risk-based capital requirements. Rate increases, tightened underwriting standards and a redesigned product portfolio have been implemented.
Phoenix 'A' Affirmed
The "A" rating of Phoenix Home Life Mutual Insurance Co., Hartford, Conn., was affirmed by A.M. Best, which indicated that despite competition from larger companies, Phoenix had made significant progress with a new strategy focused on the total wealth optimization needs of upper income markets. However, A.M. Best also stated that it believes Phoenix will face challenges in penetrating its chosen market. Concurrently, "A" ratings were affirmed for the following Phoenix Subsidiaries: ASL Life Assurance Co., Philadelphia; PHL Variable Ins. Co., Hartford; Phoenix Life and Annuity Co., Hartford; and America Phoenix Life & Reassurance Co., Hartford.
S&P Affirms SIAMCO
The "AApi" FSR on Sentry Insurance, a Mutual Co. (SIAMCO) was affirmed by S&P. The rating action also applies to related pool members Dairyland Ins. Co. and Middlesex Ins. Co., and fully reinsured affiliates Dairyland County Mutual Ins. Co. of Texas, Patriot General Ins. Co. and Sentry Lloyd's of TX. New pool member, Sentry Select Ins. Co., and recently acquired, fully reinsured affiliates Rock River Ins. Co. and Sentry Casualty Co. were assigned "AApi" FSRs.
