A.M. Best Co. downgraded the financial strength rating to “B+” (very good) from “A-” (excellent) of Coregis Insurance Company of South Bend, Ind. The outlook is being revised to stable from negative.
This rating action was taken following the execution of an intercompany loan from Coregis to its parent, GE Global Insurance Holding Corp. based in Overland Park, Kan., which has weakened the company’s risk-adjusted capitalization.
Coregis sold the renewal rights of its public entity business lines to Argonaut Group in San Antonio, Texas, in November 2003, placing all remaining liabilities into run off. With minimal new business activity forecast for 2004, the company is in the process of executing a new business plan. Coregis historically has experienced poor underwriting and operating performance despite previous remedial underwriting actions, which caused its current management by ERC to undertake a new strategy.
Thus, with its risk-adjusted capital declining below the threshold for an “A-” (excellent) rating, compounded by an uncertain future and historically weak underwriting and operating performance, these factors together precipitated the rating downgrade. The rating outlook is stable based on Coregis’ relative size and the stop loss protection afforded it through ERC.
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