Standard & Poor’s Ratings Services reported that it revised its counterparty credit rating on Atlantic Mutual Insurance Co. to ‘R’ from ‘B+’ and its surplus note rating to ‘D’ from ‘CCC’ following the company’s nonpayment of interest on its $100 million 8.15% surplus notes that was due on Aug. 15, 2006.
Standard & Poor’s said it has learned from more than one source that the New York State Insurance Department disallowed the interest payment.
Atlantic Mutual’s net loss of $4.6 million for the six months ended June 30, 2006, was greater than the net loss of $1.9 million for the three months ended March 30, 2006, demonstrating continued weakness in earnings.
“Based on year-to-date results, we believe Atlantic Mutual is unlikely to meet our prior expectations of earnings of at least 1x interest coverage,” said Standard & Poor’s credit analyst Jason A. Jones.
Another surplus notes issue in the amount of $15 million has interest due shortly, and Standard & Poor’s believes it is likely that Atlantic Mutual will default on this payment as well.
Source: Standard & Poor’s
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