View this article online: https://www.insurancejournal.com/news/national/2007/08/17/82816.htm
A.M. Best Co. has placed the financial strength rating (FSR) of “A” (Excellent) and the issuer credit ratings (ICR) of “a” of the Irvine Calif.-based Balboa Insurance Group and Newport the E&S Insurance Company of Plano, Texas under review with negative implications. Best also placed the FSR of “A-” (Excellent) and the ICRs of “a-” of Balboa Life Insurance Company and Balboa Life Insurance Company of New York under review with negative implications.
Best explained that the rating actions came as a direct result of “financial pressures that currently exist at the group’s ultimate parent, Countrywide Financial Corporation (CFC).”
The decision follows the news that CFC, the largest mortgage lender in the U.S., had arranged to borrow $11.5 billion to shore up its liquidity during the current credit crisis.
Best said any “further deterioration in the financial condition at CFC, as perceived by A.M. Best, would result in a downgrading of all FSRs and ICRs of Balboa’s insurance companies.”
Best also indicated the ratings would remain under view while it held discussions with both Balboa and CFC management. However the rating agency warned that “due to the volatile and quickly changing market conditions surrounding CFC, that maintenance of the present ratings will be difficult, due to the perceived drag on the insurance operations.”