A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B++ (Very Good) of MLMIC Group (New York, NY) and removed the rating from under review. The rating outlook is negative.
Concurrently, A.M. Best has downgraded the financial strength rating to B- (Fair) from B (Fair) of the independently rated Princeton Insurance Company (Princeton, NJ) and to B (Fair) from B++ (Very Good) of OHIC Insurance Company (Columbus, OH). Both ratings also are removed from under review but maintain a negative outlook.
The rating action of MLMIC Group reflects its marginal capitalization following capital enhancing efforts that did not meet A.M. Best's expectations. It also recognizes further deterioration in its operating performance during the fourth quarter of 2002 from additional strengthening of prior accident years' reserves. Overall, the group experienced a decline in policyholders' surplus of more than 30% during the year, driven by the strengthening of prior years' loss reserves by a total of $433 million, and the increase in non-admitted assets. Also, MLMIC discounts its loss and loss adjustment expense reserves, as permitted by the New York Department of Insurance, which at year-end 2002 was $522 million or more than 50% of policyholders' surplus.