MARCH 05, 2015 03:08 PM (EST)
A.M. Best Downgrades Ratings of Lumbermen's Underwriting Alliance
|Robert Valenta |
Senior Financial Analyst
(908) 439-2200, ext. 5291
Gerard J. Altonji
Assistant Vice President
(908) 439-2200, ext. 5626
Manager, Public Relations
(908) 439-2200, ext. 5159
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 05, 2015 03:08 PM (EST)
A.M. Best has downgraded the financial strength rating to E (Under Regulatory Supervision) from B+ (Good) and the issuer credit rating to "rs" from "bbb-" of Lumbermen's Underwriting Alliance (LUA) (Lee's Summit, MO). The management company/attorney-in-fact for LUA, U.S. Epperson Underwriting Company, is located in Boca Raton, FL.
The rating downgrade reflects the order by the Missouri Department of Insurance on Feb. 27, 2015 to place the exchange under regulatory supervision. LUA's $22.5 million deficit position, as stated in its recently filed year-end 2014 statutory balance sheet, resulted from an unexpected shortfall in collateral held related to LUA's largest subscriber, TS Employment, Inc., which filed for Chapter 11 bankruptcy on Feb. 2, 2015 citing approximately $95 million of federal tax debt. As a result of TS Employment, Inc.'s sudden deterioration, it was determined that LUA's collateral held was insufficient to fund its large workers' compensation deductible under the company's professional employer organization policy.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
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