RISCORP AIMS TO IMPROVE WEAK RATINGS FROM BEST

SARASOTA, Fla.-Riscorp Inc. is "actively working to address" concerns that led A.M. Best Co. to give two of Riscorp's affiliates "weak" initial ratings.

In addition, a committee of Riscorp's board of directors last week announced that it is considering the sale or complete recapitalization of the Sarasota, Fla.-based workers compensation insurer.

The board's strategic alternative committee was created late last year to evaluate options for the company, which was hit by a series of shareholder lawsuits after the insurance company's April 1996 initial public offering (BI, Feb. 3).

The continuing stockholder litigation, an ongoing audit by the Florida Insurance Department and a delay in filing a 10-K form with the Securities and Exchange Commission were among the reasons that Oldwick, N.J.-based A.M. Best assigned Riscorp Insurance Co. and Riscorp Property & Casualty Insurance Co. initial letter ratings of "C," or "weak," according to a spokesman for Riscorp. The two companies operate together as a pooled entity.

A third Riscorp company, Riscorp National Insurance Co., is not included in the "C" rating and retains Best's NR-2 rating because of limited operating experience.

"We are actively working to address A.M. Best's concerns," according to Tony Malone, Riscorp's president and chief executive officer. The company filed a partial 10-K with the SEC early last week and named Richard B. Franz as its new chief financial officer and senior vp two weeks ago.

Mr. Franz previously was senior vp, treasurer and principal financial officer of Clearwater, Fla.-based Western Reserve Life Assurance Co. of Ohio.

The shareholder suits, which charge Riscorp and its officers with civil racketeering for allegedly falsifying financial statements and concealing other relevant information, recently were consolidated in federal court in Tampa, Fla.

The company spokesman said Riscorp is in the process of filing a response to the consolidated action.

Riscorp, one of Florida's largest workers comp insurers, went public last April in a $128 million IPO. Although the stock had traded over the counter as high as $24.50 a share last year, it stood at $2.63 on May 13, having dropped as low as $1.81.