A.M. Best Co. placed the financial strength rating of “B” (fair) of the Proformance Insurance Co. of Freehold, N.J., under review with negative implications. This action reflects the deterioration of Proformance’s risk-adjusted capitalization through the first nine months of 2004. The deterioration was driven by $9.6 million in adverse loss reserve development that resulted in a decline in surplus.
The company’s parent, National Atlantic Holdings Corporation, is projecting the completion of an initial public offering for January 2005, and expects to contribute a portion of the proceeds to Proformance. Successful execution of the public offering and the subsequent capital contribution to Proformance would result in risk-adjusted capitalization supportive of its current rating. However, failure to successfully execute the public offering and subsequent capital contribution to Proformance would likely result in a downgrade.
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