Providence Washington Insurance Cos., Providence, R.I., will cease underwriting new and renewal business, to the extent permitted by law. In addition, the company has entered into an agreement with OneBeacon Insurance Co., Boston, whereby OneBeacon will acquire renewal rights in Providence Washington's small business package policies. Providence Washington plans to continue servicing its existing portfolio of commercial and personal lines business. The company reported statutory net losses of $7 million in 2002 and $35 million in 2003. It reported a net loss of $7 million in the quarter ended March 31, 2004. These losses contributed to the policyholders' surplus dropping from $92 million at year-end 2002 to $59 million at year-end 2003, and to $53 million as of the quarter ending March 31, 2004.
Providence Washington is currently rated B+ by A.M. Best and anticipates a further downgrade as a result of its inability to raise new capital. As a result of the anticipated downgrade by A.M. Best and continued decline of policyholder surplus, the company's board of directors determined that ceasing new and renewal business and servicing Providence Washington's current portfolio will allow it to meet its present and future obligations. This decision was reached in the absence of new capital being raised or a buyer for the company. Following this decision, the Providence Washington board named Jeffrey Mack as new CEO.
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