A.M. Best Co. has placed the B+ (Good) financial strength rating of Gulf States Insurance Company (Gulf States) under review with positive implications.
This rating action follows the announcement that Texas General Agency Inc. (TGA), the parent company, has signed a definitive agreement with Hallmark Financial Services Inc. for the sale of TGA and certain affiliates, including Gulf States.
The positive implications reflects the planned implementation of an inter-company pooling agreement between Hallmark’s affiliate, American Hallmark Insurance Company of Texas, currently rated A- (Excellent), and Gulf States as well as an additional Hallmark affiliate, Phoenix Indemnity Insurance Company. A.M. Best anticipates that the pooled Hallmark companies will continue to maintain favorable risk adjusted capitalization and moderate financial leverage subsequent to the transaction, in line with the current A- rating.
The rating will remain under review pending the close of the transaction as well as A.M. Best’s meeting with management and implementation of the inter-company pooling agreement.