General Accident Reinsurance Co. Gets S&P Double-"Bpi" Rating

Standard & Poor's this week assigned its double-'Bpi' rating to General Accident Reinsurance Co. of America.

General Accident Reinsurance Co. of America is licensed only in California, and commenced operations in 1987. Its major line of business is reinsurance. The company is a member of the CGU Insurance Group (formed by the June 1998 merger between Commercial Union PLC and General Accident Fire & Life Assurance Corp. PLC), a large UK-based insurance group with a presence in over fifty countries.

The following factors were incorporated in the rating of double-'Bpi':

• Extremely strong capitalization, as measured by capital adequacy ratio of over 300%.
• Together with a record of earnings volatility, the company's cumulative retained profits of just 4.4% of total assets is weak.
• Although the company is a member of the CGU Insurance Group, Standard & Poor's believes that this relationship is not a significant rating factor.

"Pi" ratings, denoted with a pi subscript, are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Pi ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a pi subscript are not subject to potential CreditWatch listings.

Ratings with a pi subscript generally are not modified with 'plus' or 'minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's says.