AM Best Corporation has removed itself from review under the provisions of the new Uniform Dispute Resolution Act and affirmed its Financial Strength Rating and LONG-TERM INCLUSIVE credit ratings of A (Outstanding) for AM Best, Long-Term Inclusive Credit Ratings (Outstanding) for AM Best, Standard Life Insurance Company and Continental Indemnity Corporation and Standard Life Insurance Company and Long Term Inclusive Credit Ratings (Outstanding) for Continental Indemnity Corporation. It is the company’s decision to suspend review of the review. This action was taken due to the fact that AM Best’s credit rating has been adversely affected by the recent events in Greece involving the insolvency of a Greek bank with accounts held by AM Best.
“We have made the decision to suspend our long-term review of the Long-Term Inclusive Credit Ratings and Standard Life Insurance company,” said Larry M. Johnson, the president and chief executive officer of AM Best. “This is a difficult step, but one we believe is necessary in light of the recent events surrounding our two largest lender peers,” Mr. Johnson added.
“We are extremely disappointed in this decision. However, as a company we have a responsibility to protect our financial stability and will do all we can to protect our financial stability by making decisions that are in the best interests of our business and customer base,” said David M. Lewis, the president and chief executive officer of Continental Insurance Corporation. “While there are a number of uncertainties associated with the global economy, our decision was based on the fact that AM Best’s credit rating continues to be a strong credit rating and reflects the solid financial fundamentals that led to our successful listing in the Nasdaq and our solid financial performance in the United States and Europe.” Mr. Lewis continued that Continental believes that AM Best’s business model is attractive to investors and therefore we expect to continue to generate substantial revenue growth in the near term.
“California life insurance is critical to the operation of our company and we expect that this change will have a positive impact on the quality of life insurance products that we sell,” said William E. Cottrell, the president and chief executive officer of Continental Insurance Corporation. “As a result of our review, we have taken a number of important actions including the suspension of the review of AM Best and the evaluation of our other companies. We believe that these changes will help us to better serve our customers.”
The review of AM Best is the first step in the process by which AM Best’s policyholders, underwriters, agents, underwriters, financial and internal control teams, and other key personnel will evaluate the status of the business and determine if it needs any additional changes. “AM Best’s long-term exclusivity policy and solid financial reporting history are strong factors that support our decision to suspend review,” Mr. Lewis concluded.
In addition to its financial reporting, the California Department of Insurance also requested that the California Office of Financial Regulator provide an update on AM Best. This report will examine the financial strength rating methodology used by the California insurance company and its credit rating.
“AM Best’s financial health is extremely strong and we expect continued profitability over the next several years as we work to position ourselves for continued success as an independent, diversified company that caters to all types of consumer protection,” Mr. Lewis concluded. “We are pleased that the state of California has taken this important step and are confident that the new processes and methods that will be used will strengthen AM Best’s financial position and help to position us as an attractive investment vehicle,” Mr. Lewis concluded.
“These changes will ensure that our independent underwriters and underwriting teams will have a complete picture of AM Best’s business and the company’s ability to generate substantial revenue growth. We believe that this change will benefit both AM Best and our underwriter customers and that it will help us become more competitive,” Mr. Lewis concluded.