NEW YORK--(BUSINESS WIRE)--Standard & Poor's--Sept. 29, 2000--
Standard & Poor's today affirmed its single-'Api' financial strength
rating on Motors Insurance Corp. (MIC) and its reinsured property and
casualty subsidiaries (see list).
The rating is based on the company's extremely strong
capitalization and good operating performance, partially offset by
volatility in its premium revenues.
The company mainly writes private passenger and commercial
automobile physical damage and auto extended warranty coverages,
marketed through General Motors Acceptance Corp. (GMAC) and non-GMAC
The company has maintained intercompany reinsurance arrangements
in which it assumes a substantial portion of the insurance programs
produced by its property and casualty subsidiaries.
The company redomesticated from New York State to Michigan,
effective April 30, 1999. It is licensed in all states, the District
of Columbia, and Canada. It began business in 1939.
Major Rating Factors:
-- Capitalization was extremely strong at year-end 1999, as
indicated by a Standard & Poor's capital adequacy ratio of
286%. The company's surplus, which stood at $1.6 billion at
year-end 1999, has grown at a compound annual rate of 9.5%
-- Operating performance has been good, with the time-weighted
return on revenue from 1996 to 1999 at 9.2%.
-- The company's 1999 unaffiliated common stock leverage is high
(77% of policyholder surplus). At year-end 1999, the company
was exposed to interest-rate risk, with the ratio of
collateralized mortgage obligations and loan-backed bonds at
0.9 times surplus.
-- The company has a history of volatility in its premium
revenues, with year-to-year changes in net premiums written
ranging from minus 13.5% to plus 100.7% since 1994. The
increase in net premiums written to $2.1 billion in 1998 from
$1.05 billion in 1997 was primarily due to the acquisition of
the Integon group of companies, of which MIC assumed 100% of
the net business.
The company (NAIC:22012) is a wholly owned subsidiary of GMAC
Insurance Holdings Inc., which is wholly owned by General Motors
Acceptance Corp. (counterparty credit rating single-'A'), a wholly
owned subsidiary of General Motors Corp. (NYSE:GM). Although the
company is a downstream subsidiary of GM, the rating does not include
additional credit for implied group support.
The single-'Api' financial strength rating is affirmed for all
MIC's reinsured subsidiaries:
CIM Insurance Corp. (NAIC:22004)
MIC Property & Casualty Insurance Corp. (NAIC:38601)
MIC General Insurance Corp. (NAIC:38660)
National General Insurance Co. (NAIC:23728)
National General Assurance Co. (NAIC:42447)
'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 said.---CreditWire.
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