CHICAGO, May 5 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has
reaffirmed the 'AA-' (Double-A-Minus) claims paying ability rating of American
Pioneer Title Insurance Company (American Pioneer). This very high rating is
based on both American Pioneer's high stand-alone financial strength as a
regional title insurance underwriter and a capital support agreement provided
by an affiliate, PMI Mortgage Insurance Co. (PMI), a private mortgage insurer
rated 'AA+' (Double-A-Plus). American Pioneer's strong stand-alone financial
profile is characterized by above-average operating profitability and capital
adequacy relative to peers, as well as a conservative investment policy and
strong agency monitoring and control systems.
Operating results have been favorable for American Pioneer for the last
several years, as evidenced by an average annual statutory combined ratio of
91.5 percent and return on policyholders' surplus of 23.0 percent from
1995-99. American Pioneer consistently reports better loss ratios than
industry averages, which is indicative of the effectiveness of its
underwriting and risk management policies. The company reported net income of
$8.1 million on revenues of $100.4 million in 1999.
American Pioneer's capital position is very strong as estimated by DCR's
risk-adjusted capital model, with adjusted capital equal to 222 percent of
required capital at yearend 1999. American Pioneer's reserving practices are
also conservative as DCR's analysis indicates that statutory reserves appear
to be significantly redundant relative to actuarial requirements at yearend
1999.
American Pioneer's investment policy stresses preservation of capital. As
such, invested assets are concentrated in highly liquid, investment-grade
bonds and short-term investments, with a strong emphasis on high-quality tax
exempt securities. Invested assets at yearend 1999 were allocated 82 percent
bonds, 14 percent cash and short-term investments, and 4 percent mortgages and
real estate.
Also factored into the rating are American Pioneer's more limited size and
geographic scope relative to some title industry competitors and the cyclical
nature of the title insurance business due to the variability of operating
revenues caused by macroeconomic factors that impact real estate market
activity.
American Pioneer is a Florida-domiciled title insurer that reported
statutory admitted assets of $44.4 million and policyholders' surplus of
$20.2 million at December 31, 1999. Approximately 71 percent of the company's
1999 business originated in Florida. American Pioneer has embarked on a
business expansion strategy in recent years to broaden its geographic scope.
The company is currently licensed in 41 states and writes business in 33
states. This strategy has led to significant premium growth in recent years.
Earned premium increased by 34 percent in 1999 to $93.9 million.
American Pioneer is a subsidiary of PMI Group, Inc., a publicly traded
holding company with subsidiaries engaged primarily in private mortgage
insurance and title insurance. PMI Group reported consolidated assets of
$2.1 billion and shareholders' equity of $1.2 billion at December 31, 1999.
PMI Group's 1999 earned premium was split approximately 82 percent private
mortgage insurance and 18 percent title insurance. PMI Group's private
mortgage insurance subsidiary, PMI Mortgage Insurance Co., is the nation's
third-largest private mortgage insurer based on in-force premium.
For additional information, visit DCR's Web site at http://www.dcrco.com
(Quick Search: American Pioneer). DCR's research is also available on
Bloomberg at DCR, FirstCall's BondCall Direct/Research Direct at
http://www.firstcall.com and Multex at http://www.multex.com, as well as
through other third-party providers.
SOURCE Duff & Phelps Credit Rating Co.
 back to top
Related links:
http://www.dcrco.com
CONTACT:
James B. Auden, CFA, 312-368-3146, or
auden@dcrco.com, or Douglas M. Pawlowski, CFA, 312-368-2054, or
pawlowski@dcrco.com, both of Duff & Phelps
|
