Fitch has downgraded the Insurer Financial Strength rating of Idaho-based direct writer General Fire and Casualty Company (GenFire) to ‘BB-‘ from ‘BB+’ and placed the rating on Rating Watch Negative.
This action follows GenFire’s request for a 30-day extension for filing its year-end 2004 statutory statement to allow for a change in accounting of a major reinsurance contract due to concerns regarding appropriate levels of risk transfer.
This contract has been nonrenewed and cut off effective Dec. 31, 2004. The company restructured its reinsurance program for 2005. Fitch expects the impact of any restatement to have a significant affect on the company’s policyholders’ surplus position, as well as its parental dividend capacity. The latter of which is particularly important given the sizable burden on GenFire to service holding company debt obligations.
GenFire is a specialty property and casualty insurer, which since 1999, has operated under a new and unique business model centered on its patent-pending policy form and web-based technology. The company focuses on specialty niches in the commercial multi-peril business segment, such as integrated agribusiness and other targeted commercial classes.
Idaho-based GenFire reported statutory policyholders’ surplus and assets of $13.8 million and $47.5 million, respectively, at Sept. 30, 2004.
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