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
A.M. Best Company
Marc Liebowitz, 908-439-2200, ext. 5071
Altonji, 908-439-2200, ext. 5626
Assistant Vice President
Morrow, 908-439-2200, ext. 5378
Senior Manager, Public
Peavy, 908-439-2200, ext. 5644
Assistant Vice President,
Source: A.M. Best Company