Ratings Recap: Concord Re, Doctor’s Co., ACUITY, Alfa Group

January 25, 2008

Standard & Poor’s Ratings Services has withdrawn its ‘BB+’ rating on Concord Re Ltd.’s $365 million bank loan. The company repaid all outstanding amounts and terminated the facility.

Fitch Ratings has upgraded the Insurer Financial Strength (IFS) ratings to ‘A’ from ‘A-‘ on The Doctor’s Company, an Intercompany Insurance Exchange (Doctors) and its wholly owned insurance subsidiaries, collectively referred to as The Doctors Company Group (TDC). The rating outlook for all of the ratings is stable. Fitch noted last October it had, “placed the ratings of TDC on Positive Rating Watch following the company’s announcement of its proposed acquisition of SCPIE Holdings, Inc (SCPIE) for $281 million. At the time the rating agency had indicated “that there was positive rating pressure on TDC’s ratings from the company’s strong performance under Fitch’s economic capital model, Prism, above-average underwriting profitability relative to peers, adequate loss reserve levels, and an experienced management team, however, a further analysis of SCPIE, its loss reserve position, and a pro forma capital adequacy analysis of the combined entities was warranted to resolve the Rating Watch status.”

Standard & Poor’s Ratings Services has raised its counterparty credit and financial strength ratings on ACUITY a Mutual Insurance Co. to ‘A+’ from ‘A’ and assigned a stable outlook. “The rating action reflects our view that ACUITY has significantly developed and strengthened its market position in commercial and personal lines insurance across its top five key states,” explained S&P credit analyst Tom E. Thun. “At the same time, it has maintained solid operating and underwriting performance as well as very strong capitalization.”

Fitch Ratings announced that it is maintaining its Rating Watch Negative on the Alfa Group and its operating companies. “The Negative Rating Watch reflects the expected reduction in policyholders’ surplus when Alfa Mutual Group follows through on its plan to privatize Alfa Corporation later this year,” Fitch explained. “The privatization of Alfa Corp., in which Alfa Mutual Group purchases the 45 percent share of Alfa Corp. stock that it does not currently own, is expected to close in the second quarter of 2008 at an estimated total cost of $840 million. Alfa Group’s strong capitalization as measured by absolute dollar, risk-adjusted and operating leverage ratio has historically contributed heavily to its ‘AA-‘ IFS rating. Specifically, Alfa Group’s consolidated statutory surplus is expected to be approximately $1.9 billion at year-end 2007, and the property/casualty group writes at an extremely conservative 50 percent premium-to-surplus ratio.

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