And the other shoe falls:
London Pacific Halts Underwriting as WorldCom Investment Sours
LONDON, Jul 03, 2002, (A. M. Best from COMTEX) -- Investment exposure related to WorldCom Inc. forced London Pacific Group Ltd. Reinsurance to halt writing new business through its U.S. life insurance subsidiary.
The London-based company said its London Pacific Life & Annuity Co. (NYSE: LDP chart, msgs) will stop accepting new business. "Persistent negative events in the bond and equity markets, including the recent WorldCom announcement, continue to erode significantly the capital of the U.S. life insurance subsidiary," the company said in a statement. "To date, the group has been unsuccessful in concluding a transaction to enhance the capital of the company."
London Pacific said its U.S. subsidiary will stop writing new business "pending further developments." The group's other insurer, London Pacific Assurance Ltd., also will stop writing new business, although it had not been affected "to the same extent" by investment losses, the company said.
Efforts to reach someone at London Pacific for further comment were unsuccessful.
London Pacific shares plunged from $3.20 to $1.06 on July 2, as word got out that its financial position was weakened by WorldCom's announcement.
On July 2, A.M. Best Co. downgraded the financial strength rating of London Pacific Life & Annuity Co. to C++ (Marginal) from B (Fair), amid continuing uncertainty about the company's prospects as a stand-alone entity as plans to improve its capital position have not yet been executed. London Pacific could face significant losses on its fixed maturity investment holdings, of which $10.5 million is in WorldCom and affiliated issuers, said A.M. Best (BestWire, July 2, 2002). Recent losses in the company's private equity and public debt portfolios have caused surplus to deteriorate, and A.M. Best said it believes that London Pacific's regulatory capital may not meet required levels in the near term.
A.M. Best also withdrew London Pacific's financial strength rating of C++ (Marginal) and assigned it an NR-4 at the company's request.
(By David Pilla, senior associate editor, BestWeek:David.Pilla@ambest.com)
David Pilla
Copyright (C) 2002 by A. M. Best Company, Inc. |
