Best Places Omaha P&C Under Review

A.M. Best Co. announced that it has placed the financial strength rating of “A-” (Excellent) of Omaha Property and Casualty Insurance Company (OPAC) (Omaha, Neb) under review with developing implications.

“The under review status reflects the November 1, 2004, announcement of a definitive agreement between Beazley Group plc (Beazley) and Mutual of Omaha Insurance Company (Mutual of Omaha) regarding the sale of Mutual of Omaha’s wholly-owned subsidiary, OPAC.” (See IJ Website Nov. 3)

Best noted that the acquisition “is part of Beazley’s entrance into the U.S. admitted market. The developing implications reflect anticipated capital improvement and increased shareholder participation of Beazley, which is offset by the uncertainty regarding its business plans and strategy in the U.S. market.”

It also indicated that under the terms of the acquisition, “The Omaha Indemnity Company (OIC), an affiliate of Mutual of Omaha, has agreed to assume all obligations of OPAC prior to its acquisition by Beazley including reinsuring OPAC’s historical business on a 100 percent quota share basis. As security for this quota share arrangement, OIC has agreed to place a certain amount of funds in trust equal to 100 percent of OPAC’s gross reserves for historical business, and in the unlikely event that these funds in trust were exhausted, OIC would be required to provide additional funds to meet any further losses.”

Best said it “expects OPAC’s former parent, Mutual of Omaha, to maintain an orderly exit from all property/casualty business.” It also said OPAC’s rating would remain under review pending the closing of the sale, which is anticipated in the first quarter of 2005. Best will also plans to meet with the new ownership and will conclude “a thorough review of the business plans.”

Topics Property Casualty