Standard & Poor’s (S&P) revised its financial strength rating (FSR) on Amwest Surety Insurance Co. (Amwest Surety) to “R” from “CCCpi.”
S&P took this rating action after Amwest Surety consented to be placed under an administrative order of supervision by the Director of Insurance for the state of Nebraska, pursuant to an Order of Supervision. Supervision is an administrative order authorized pursuant to Nebraska law that enables the management to continue operating the company under the supervision of the Nebraska Director of Insurance.
Amwest Surety is a subsidiary of Amwest Insurance Group Inc., a Calabasas, Calif.-based insurance holding company operating through its subsidiaries: Amwest Surety Insurance Co. and Far West Insurance Co. (Far West). Far West is not subject to the Order of Supervision.
When S&P assigned its “CCCpi” FSR to Amwest Surety on Jan. 9, 2001, it cited the company’s weak capitalization, marginal liquidity, and deteriorating underwriting performance. S&P also believed Amwest Insurance Group Inc. would have difficulty paying principal and interest on its debt as Amwest Surety and its affiliate companies became a less viable means to harvest needed cash. On a consolidated basis, the group accounted for losses in excess of $14 million in the first nine months of 2000, with total capital amounting to $42.6 million as of Sept. 30, 2000.
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