Exposure to Florida Catastrophe Fund Triggers A.M. Best Review

A.M. Best Co. says based on the credit market contraction and the uncertainty regarding the Florida Hurricane Catastrophe Fund’s ability to fund its claims-paying capacity, it placed several insurers’ ratings under review with negative implications.

The rating actions are a follow-up to a press release issued on Oct. 15, in which A.M. Best reiterated its concerns with the uncertainty associated with the contingent capital nature of the CAT Fund.

A.M. Best continues to assess the impact on rated entities’ risk-adjusted capitalization, based on the reduction in the potential coverage available from the CAT Fund. As a result, despite near completion of the 2008 hurricane season, several rated entities have been put under review with negative implications.

It is anticipated that the ratings will remain under review through the completion of the 2008 hurricane season. A.M. Best will then re-evaluate the ratings based on discussions with management concerning their catastrophe risk management practices. As a result, the ratings may likely be affirmed, while the outlooks will be assessed, barring any significant hurricane occurring in the interim, which would have a material adverse impact on the entities’ risk-adjusted capital position.

The following rated entities have been placed under review with negative implications:

Allstate Floridian Insurance Group
Argus Fire & Casualty Insurance Co.
Omega Insurance Co.
Safeway Property Insurance Co.
Tower Hill Preferred Insurance Co.
Tower Hill Prime Insurance Co.
United Automobile Insurance Group

Source: A.M. Best Co.
www.ambest.com.