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S&P assigned its “R” financial strength rating to Cascade National Insurance Co. after the Washington State Insurance Department placed the company under receivership on the basis of inadequate capital, effective November 2004.

The Washington State Department of Insurance stated the company’s financial problems had become more serious and its capital is said to have decreased to less than $2 million, much less than the state required minimum of $6.1 million. The company’s operating ratio also rose to more than 160 percent.

An insurer rated “R” is under regulatory supervision due to its financial condition. During the pendency of the regulatory supervision, the regulators may favor one class of obligations over others, or pay some obligations and not others. The rating does not apply to insurers subject only to nonfinancial actions such as market conduct violations.