News Column

A.M. Best Places Ratings of International Fidelity Insurance Company and Its Subsidiary under Review with Negative Implications

May 8, 2014



OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Besthas placed under review with negative implications the financial strength rating of A- (Excellent) and the issuer credit ratings of ďa-Ē of International Fidelity Insurance Company (IFIC) (Newark, NJ) and its subsidiary, Allegheny Casualty Company (Allegheny) (Norristown, PA).

The under review with negative implications status reflects the recent announcement that IFIC will revise and re-file its year-end 2013 statutory statement. The company has requested that its regulator grant a 90-day filing extension for the re-filing of the annual statement as well as an extension of 90 days to file the March 31, 2014 quarterly statement. While management believes it has largely determined the 2013 statement revisions, there remains uncertainty as to the overall impact this quarterly filing may have on IFICís current ratings. However, based on the revised projected statements, the groupís capitalization will continue to comfortably support it current ratings.

The expected re-filing follows the determination in March 2014 by IFICís management that its former chief financial officer had misappropriated funds and entered into unauthorized investments. Although the majority of these funds have been recovered, the company will record significant investment losses, which are expected to reduce surplus by approximately 30%. These events call into question the effectiveness of the groupís risk management. As a result, IFIC is conducting a full operational review that will result in the implementation of new corporate governance policies and procedures to mitigate the potential of such events occurring in the future. However, the success of such actions will not be readily apparent over the near term.

The ratings will remain under review pending the re-filing of IFICís 2013 annual statement and the filing of its first quarter 2014 statement, along with A.M. Bestís discussions with management regarding the implementation of corporate governance controls.

The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.





A.M. Best Company

Marc Liebowitz, 908-439-2200, ext. 5071

Senior Financial Analyst

marc.liebowitz@ambest.com

or

Gerard Altonji, 908-439-2200, ext. 5626

Assistant Vice President

gerard.altonji@ambest.com

or

Rachelle Morrow, 908-439-2200, ext. 5378

Senior Manager, Public Relations

rachelle.morrow@ambest.com

or

Jim Peavy, 908-439-2200, ext. 5644

Assistant Vice President, Public Relations

james.peavy@ambest.com

Source: A.M. Best Company


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Business Wire