A.M. Best Co. has downgraded the financial strength rating to E (Under Regulatory Supervision) from B (Fair) for Legion Insurance Company and Villanova Insurance Company, Pa.
The downgrade is tied in to the March 29 announcement by their ultimate parent company, Mutual Risk Management, Ltd. that the Commonwealth Court of Pennsylvania has placed the insurance companies into voluntary rehabilitation. The order of rehabilitation went into effect April 1.
A.M. Best has also downgraded the FSR to E (Under Regulatory Supervision) from B (Fair) for Legion Indemnity Company, Ill., to note its affiliation with companies under regulatory supervision and the uncertainty regarding the status of its reinsurance recoverables from these affiliates. The three companies have operated under an intercompany reinsurance pooling arrangement since 1996. Additionally, they have operated as the fronting carriers for the majority of the Bermuda-based I.P.C. Group rent-a-captive programs.
In another move, A.M. Best placed the B+ (Very Good) rating of I.P.C. Group, Bermuda, under review with negative implications pending discussions with management on the collateralized nature of its loss reserves, strategic alternatives including finding another quality fronting carrier, along with related issues.
Standard & Poor’s, meantime, has revised its FSR on Legion Insurance Co. and Villanova Insurance Co. to ‘R’ because of the Pennsylvania State Court decision to place the companies under regulatory control.
Standard & Poor’s also said it lowered its FSR on Legion Indemnity Co., the remaining pool member, to triple-‘C’ because it expects the company’s regulators to consider a similar action.
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