MOODY'S CONFIRMS CREDIT RATINGS OF USF&G CORPORATION (SENIOR DEBT AT Baa2)
New York, 08-11-97 -- Moody's Investors Service confirmed the credit ratings of USF&G Corporation following the Company's recent announcement to acquire Titan Holdings, Inc., an insurance company that underwrites nonstandard auto and public entity insurance, for $234 million in cash and stock, plus assumed debt. Moody's pointed out that the transaction will not have a material effect on the Company's capital structure, or debt service. According to Moody's, the acquisition makes strategic sense because it will enhance USF&G's market position in nonstandard auto and public entity insurance. The rating agency noted that these insurance coverages are considered specialty lines and provide some growth opportunity, in an otherwise flat property and casualty marketplace.
On a cautionary note, Moody's suggested that increased competition in nonstandard auto has put pressure on market rates. Titan's historical high premium growth of nonstandard auto, also adds some uncertainty in estimating that business's loss reserves.
The following ratings were confirmed:
USF&G Corporation -- senior debt at Baa2; senior debt shelf registration at (P) Baa2; subordinated debt at Baa3; junior subordinated debt at Ba1; junior subordinated debt shelf registration at (P) Ba1.
USF&G Capital I -- "baa3" rating to the Capital Securities, Series A.
USF&G Capital II -- "baa3" rating to the Capital Securities, Series B.
USF&G Capital III --- "baa3" rating to the Capital Securities, Series C.
United States Fidelity and Guaranty Company -- insurance financial strength at A3.
Fidelity and Guaranty Life Insurance Company -- insurance financial strength at Baa1.
USF&G Corporation, through its subsidiaries, is engaged in both property & casualty and life insurance. USF&G is headquartered in Baltimore, Maryland, and reported consolidated assets of $14.8 billion, and equity of $1.8 billion as of June 30,1997.
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