Home Holdings Inc. Responds to Downgrade in Senior Debt Rating

Home Holdings Inc., parent company of Home Insurance, has expressed strong disagreement with the recent downgrading of its senior debt rating by Standard & Poor's from "BBB-" to "BB-". In response to the negative ratings from Standard & Poor's, A.M. Best Company, and other rating agencies, Home Holdings' president and CEO, Lars-Goran Nilsson, emphasized the company's efforts to streamline its operations and improve its financial flexibility through a two-part capital plan. The plan involves raising up to $250 million in new capital and committing its major shareholder, Trygg-Hansa AB, to exchange its $170 million loan for equity. Despite a disappointing year, Home Holdings is confident that these measures will enhance its position and alleviate concerns over reduced financial flexibility.

Key Takeaways:

• Home Holdings Inc.'s senior debt rating was downgraded by Standard & Poor's from "BBB-" to "BB-".
• A.M. Best Company also downgraded Home Insurance's claims paying ability from A- (Excellent) to B+ (Very Good).
• The company has implemented broad-based financial restructuring and expense reduction programs, which have improved its efficiency and reserve position.
• The two-part capital plan involves raising up to $250 million in new capital and exchanging Trygg-Hansa AB's $170 million loan for equity.
• Home Holdings believes that its financial flexibility has not been reduced, and the rating downgrades are "unjustified".
• The company's primary business is writing commercial property and casualty insurance through its subsidiary, The Home Insurance Company.
• Home Holdings also owns Gruntal Financial Corp., a securities brokerage business, and Sterling Forest Corporation, the main asset of which is a large, privately-held parcel of land in the New York metropolitan area.

Statistics:

• Standard & Poor's downgraded Home Holdings' senior debt rating from "BBB-" to "BB-".
• A.M. Best Company downgraded Home Insurance's claims paying ability from A- (Excellent) to B+ (Very Good).
• The two-part capital plan aims to raise up to $250 million in new capital and involves the exchange of Trygg-Hansa AB's $170 million loan for equity.
• Home Holdings has a history dating back to 1853, with its subsidiary, Home Insurance, founded in 1853.
• Home Insurance is a leading underwriter of international property, casualty, and specialty lines insurance.

Sources:

• Home Holdings Inc. (1994, November 7). Business Wire.
• Standard & Poor's. (1994). "Standard & Poor's Downgrades Home Holdings Inc.'s Senior Debt Rating".
• A.M. Best Company. (1994). "A.M. Best Downgrades Home Insurance Claims Paying Ability".