Best Places Canopius US Insurance Under Review

December 23, 2013

A.M. Best Co. has placed under review with developing implications the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of Delaware-based Canopius US Insurance, Inc. The action is also somewhat related to Best’s rating actions on Tower Group.

Best said the under review status follows the recent announcement that Bregal Capital has entered into a definitive agreement to sell its 95 percent majority stake and all remaining shares of Canopius Group Limited (Canopius) (Guernsey) to Sompo Japan Insurance Inc. (Sompo Japan), a subsidiary of NKSJ Holdings Inc. Under the terms of the agreement, Sompo Japan has agreed to pay $965 million. The transaction is expected to close in the second quarter of 2014.

The under review status and developing implications “reflect the uncertainty as to the final rating outcome based on further clarity and details around Canopius US, its defined role within the Sompo Japan Group, any synergies to be garnered and the implicit and explicit support to be provided by its new parent and member affiliates,” Best explained. “Further details regarding management, new business initiatives, governance, reinsurance and other forms of capital support including capital management plans are also key factors that can influence these ratings positively and/or negatively.”

Best added that the ratings would remain under review while it “continues its discussions with new ownership and existing management regarding these key operational and strategic issues, as well as capitalization and earnings expectations. This transaction is subject to customary regulatory approvals.”

Source: A.M. Best

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