CHICAGO, May 17 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has
upgraded the claims paying ability ratings of the Vesta Insurance Group
(NYSE: VTA) insurance subsidiaries to 'BBB-' (Triple-B-Minus) from 'BB+'
(Double-B-Plus). The upgrade moves the insurance ratings into the secure
category. DCR has also upgraded VTA's senior debt to 'BB-' (Double-B-Minus)
from `B+` (Single-B-Plus). Additionally, DCR upgraded the capital securities
(trust preferred) rating of Vesta Insurance Trust I and VTA's convertible
preferred stock rating to 'B+' (Single-B-Plus) from 'B' (Single-B). The Rating
Outlook is Positive.
The rating actions reflect a continued, significant reduction in financial
leverage at VTA. VTA has further reduced its long-term debt by $57.3 million
in late 1999 and early 2000 through a series of transactions. As a result,
VTA's debt-to-total capital ratio (including capital securities) fell from 48
percent at December 31, 1999, to 39 percent on a pro forma basis. The ratio
had been as high as 64 percent on December 31, 1998.
VTA's statutory surplus also improved substantially in 1999, both in
absolute dollars and relative to the volume of business written as VTA
reported strong statutory earnings and exited from its assumed reinsurance and
commercial lines of business. The rating actions also recognize VTA's
conservative investment strategy and good geographical diversification.
At the same time, the ratings recognize that some uncertainties remain
open regarding shareholder lawsuits and reinsurance recoverables.
Additionally, while persistency has been good, new applications remain below
historical levels and VTA's diversification by line of business has been
reduced by its withdrawal from commercial lines.
DCR's ratings of VTA are listed below:
Consolidated Claims Paying Ability
Vesta Insurance Group, Inc. 'bbb-' (Triple-b-Minus)
Claims Paying Ability
Affirmative Insurance Co. 'BBB-' (Triple-B-Minus)
Hawaiian Insurance & Guaranty Co. 'BBB- (Triple-B-Minus)
Insura Property and Casualty Insurance Co. 'BBB-' (Triple-B-Minus)
Sheffield Insurance Corporation 'BBB-' (Triple-B-Minus)
Shelby Casualty Insurance Co. 'BBB-' (Triple-B-Minus)
The Shelby Insurance Co. 'BBB-' (Triple-B-Minus)
Vesta Fire Insurance Corporation 'BBB-' (Triple-B-Minus)
Vesta Insurance Corporation 'BBB-' (Triple-B-Minus)
Vesta Lloyds Insurance Company 'BBB-' (Triple-B-Minus)
Fixed-Income Securities Ratings
Vesta Insurance Group, Inc.
Senior Debt 'BB-' (Double-B-Minus)
Vesta Capital Trust I
Preferred Stock 'B+' (Single-B-Plus)
Vesta Insurance Group, Inc.
Convertible Preferred Stock 'B+' (Single-B-Plus)
Vesta Insurance Group, Inc., headquartered in Birmingham, Ala., is a
holding company for a group of property and casualty insurance companies.
For additional information, visit DCR's Web site at http://www.dcrco.com
(Quick Search: Vesta). 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.
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Related links:
http://www.dcrco.com
CONTACT:
Donald F. Thorpe, CFA, CPA, 312-606-2353,
thorpe@dcrco.com, or Keith M. Buckley, CFA, 312-368-3211,
buckley@dcrco.com, both of Duff & Phelps
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