Published:
A.M. Best Downgrades Ratings of American Community Mutual Insurance Company
OLDWICK, N.J. - (BUSINESS WIRE) - A.M. Best Co. has downgraded the financial strength rating to C+
(Marginal) from B (Fair) and issuer credit rating to "b-" from "bb" of American
Community Mutual Insurance Company (American Community) (Livonia,
MI). The outlook for both ratings is negative.
The downgrades reflect an expected material net operating loss resulting
from reserve strengthening, which will occur in third quarter 2009, with
a corresponding decrease in surplus. An anticipated reduction in the
company's deferred tax asset in third quarter 2009 is expected to
further decrease surplus. In addition, two surplus notes represent a
significant portion of total surplus.
American Community's premium revenue and net income are derived
primarily from marketing major medical products to individuals and
employer groups, chiefly in seven Midwestern states and Arizona.
Although American Community intends in the near term to reduce its
premium revenue to match its surplus base by eliminating or reducing
unprofitable segments in certain states, A.M. Best believes its future
operating results will continue to be challenged by an increasingly
competitive major medical market dominated by larger managed care
carriers with deeper network discounts.
For Best's Credit Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including
any additional methodologies and factors that may have been considered,
can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit
rating organization dedicated to serving the financial and health care
service industries, including insurance companies, banks, hospitals and
health care system providers. For more information, visit www.ambest.com.
A.M. Best Co.
Analysts:
Brian Virostek,
908-439-2200, ext. 5531
brian.virostek@ambest.com
or
Jeffrey
Lane, 908-439-2200, ext. 5567
jeffrey.lane@ambest.com
or
Public
Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle
Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
Copyright © 2009, Business Wire, Inc., All rights reserved.
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