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S&P puts Atlantic Mutual on negative watch
Standard & Poor's said Friday that it placed its BBB counterparty credit and financial strength ratings on Atlantic Mutual Insurance Co., Centennial Insurance Co., Atlantic Specialty Insurance Co., and Atlantic Lloyds Insurance Co. of Texas (collectively referred to as Atlantic Mutual) on CreditWatch with negative implications because of Atlantic Mutual's announcement that it is selling its commercial lines business to OneBeacon Insurance Co.
"This business, combined with the previously announced sale of Atlantic Mutual's marine division to Travelers Property Casualty Corp., means the company is exiting lines that in 2002 constituted 85% of its direct premiums," explained S&P credit analyst John Iten. "This makes Atlantic Mutual a much-smaller, less-diversified writer of personal lines business."
Both transactions involve the sale of unearned premiums and renewal rights, leaving Atlantic Mutual with the challenge of managing the runoff of claims reserves associated with the older, less-profitable business for which significant reserve strengthening has already occurred.
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