Standard & Poor’s Ratings Services has lowered its counterparty credit rating on San Diego-based Arrowhead General Insurance Agency Inc. to ‘B-‘ from ‘B’.
Standard & Poor's Ratings Services has lowered its counterparty credit rating on San Diego-based Arrowhead General Insurance Agency Inc. to 'B-' from 'B'. S&P also assigned the rating a negative outlook. "This rating action reflects our view that the company is unable to sustain the financial-performance goals that were established when we initially assigned the ratings in 2006," explained S&P credit analyst Michael Gross. S&P noted: "These metrics include sustained adjusted EBITDA fixed-charge coverage of 2.4x, annual net income of about $10 million, and the maintenance of larger bank loan covenant cushions relative to actual recent experience. Declining property/casualty premium rates and some carrier disruption have hurt Arrowhead. For full-year 2007, Arrowhead had net income of $0.4 million and adjusted EBITDA coverage of 1.5x. For the quarter ending March 31, 2008, the company reported a net loss of $3.2 million and adjusted EBITDA fixed-charge coverage of 1.0x." S&P indicated that it "expects that the company will continue to pursue expense savings aggressively in the face of ongoing soft market conditions."
Published on May 9, 2008
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