S&P’s revised its financial strength rating on American Horizon Insurance Co. to “R” from double-“Bpi” after learning that the Cook County Circuit Court issued a liquidation order with a finding of insolvency against the company on July 11, 2002.
Before this court action, the Illinois Department of Insurance determined that the company was operating in hazardous financial condition. As of Dec. 31, 2001, American Horizon reported $3 million in capital and negative $962,204 in surplus, resulting in a statutory surplus impairment of almost $1.5 million. As of March 31, 2002, the company reported a negative policyholder surplus of about $2.8 million.
The company is also below the mandatory control level under risk-based capital requirements. American Horizon entered into an agreed corrective order with the Illinois Department of Insurance on March 1. The Illinois Insurance Guaranty Fund will be responsible for the covered claims of the company’s Illinois policyholders.
American Horizon Insurance Co. is a wholly-owned subsidiary of American Holdings Inc., domiciled in Delaware. The company is licensed in 13 states and mainly writes private passenger automobile insurance. The company has been in run-off since June 2001, and has not written new business in 2002. In assigning its double-“Bpi” rating to American Horizon Insurance Co. (formerly Arcadia National Insurance Co.). S&P’s cited the company’s high operating ratio, which indicates weak financial performance.
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