Worries Over Shrinking Assets As Ullico Director Resigns
On March 3, Best lowered its rating from B+ (Very Good) to B (Fair). Just days later, on March 7, the rating was dropped to B-. Although ULLICO's capital remains adequate, the company has had losses in its core insurance lines and its reserves have been cut by increased claims. Of equal concern are eroding assets that are "getting to the point where we are starting to get uncomfortable," says Carl Austin, Best's managing senior financial analyst.
One investment that needs to be watched is ULLICO's new 383,000-sq-ft headquarters building now under construction in downtown Washington, D.C. There is also "a considerable amount of limited partnerships on their balance sheet," says Austin. If those partnerships continue to perform poorly and additional write-downs are needed, "then [ULLICO] will really be in need of capital," he says. "If there is any future deterioration in their invested capital it will be very concerning."