Standard & Poor’s Ratings Services announced that it has lowered its counterparty credit and financial strength ratings on Kansas City-based Casualty Reciprocal Exchange (CRE) to ‘CCCpi’ from ‘BBpi’.
The announcement noted that CRE participates in an interaffiliate pool in which it has an 80 percent share with Equity Mutual Insurance Co. (EMI) which has the remaining 20 percent. “The rating action reflects the pool’s significant decline in capitalization and surplus, poor operating results, and adverse reserve development,” explained S&P credit analyst Alan Koerber.
S&P noted that “The pool writes mainly workers’ compensation and auto liability insurance, with an additional specialization in reinsurance. More than half of the pool’s business lies within its major states: California, New Jersey, Texas, Florida, and Pennsylvania. The group distributes its products through salaried marketing representatives working through endorsed trade association and program agents targeting selected industry segments (workers’ compensation).”
The companies are members of the Dodson Group, said S&P, comprising “a mid-size insurance group with surplus of $30.1 million at year-end 2001 and, together, are licensed in 40 states and the District of Columbia.” Dodson recently agreed to offer workers’ compensation products from Michigan’s Meadowbrook Insurance Group. (See IJ Website Nov. 22).
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