A.M. Best Lowers Ratings on I.P.C. Group

April 18, 2002

A.M. Best announced that it has downgraded the financial strength rating to C (Weak) from B+ (Very Good) of the Bermuda-based I.P.C. Group, and removed the ratings from under review.

Group operations affected include: “Mutual Indemnity (Barbados) Ltd., Mutual Indemnity Ltd., Mutual Indemnity (Bermuda) Ltd., and Mutual Indemnity (U.S.) Ltd., all of Bermuda.” Best also noted that “Mutual Indemnity (Dublin) Ltd., Ireland, has been de-coupled from the group and downgraded to a financial strength rating of D (Poor) due to its significant unrealizable assets associated with Legion Insurance Company.”

Best’s announcement indicated that the ratings downgrades were directly related to I.P.C.’s U.S. subsidiaries, collectively referred to as the Legion Companies, which were lowered at the end of March to E (Under Regulatory Supervision). Those operations affected include, “Legion Indemnity Company, Illinois, Legion Insurance Company and Villanova Insurance Company, both of Pennsylvania.”

“The rating action reflects the uncertainty of the present and future realizable value of the non-liquid assets of I.P.C., making the ability of capital to support an efficient and secure run-off of the liabilities and any asset value shortfall questionable,” said the bulletin.

It added that “While remote, it is unclear whether all of the assets of the I.P.C. companies are protected from the possible need to liquidate at the Mutual Risk Management (MRM) level. With no policy-issuing carrier identified to replace Legion Insurance Company–placed in voluntary rehabilitation on April 1, 2002–the operations of I.P.C. are at a standstill. Given the material operating and financial problems, the ability of the rent-a-captive companies to continue as an ongoing concern is doubtful. Sale of the operations is similarly capricious.”|”a.m., best, lowers, ratings, on, i.p.c., group

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