A.M. Best Co. has withdrawn the financial strength rating (FSR) of ‘A-‘ (Excellent) and issuer credit rating (ICR) of “a-” of GMAC Direct Insurance Company of Maryland Heights, Mo. and assigned an NR-5 (Not Formally Followed) to the FSR and an “nr” to the ICR. “These withdrawals are a result of the recently completed acquisition of GMAC Direct by [Bermuda-based] Maiden Holdings, Ltd. from Motors Insurance Corporation (Southfield, MI), the lead member of GMAC Insurance Group (GMACI).” Best also noted that “GMAC Direct was sold as a shell and later renamed Maiden Reinsurance Company. The FSR of ‘A-‘ (Excellent) and ICRs of “a-” of GMACI and its fifteen members are unchanged by this sale.”
A.M. Best Co. has placed the financial strength rating (FSR) of ‘A-‘ (Excellent) and issuer credit rating (ICR) of “a-” of MEEMIC Insurance Company of Auburn Hills, Mich. under review with positive implications. Best said the “rating actions are based on the announcement that a definitive agreement has been reached for the purchase of MEEMIC by Auto Club Insurance Association (Dearborn, MI), the lead member of The Auto Club Group, from Motors Insurance Corporation (Southfield, MI), the lead member of GMAC Insurance Group (GMACI). The positive implications reflect the likely positive impact on MEEMIC from its future parent, which is a higher rated organization. The deal is expected to close in second quarter 2009 following regulatory approvals. In addition, the FSR of ‘A-‘ (Excellent) and ICRs of “a-” of GMACI and its members are unchanged at this time, as are the FSR of ‘A’ (Excellent) and ICRs of “a” of The Auto Club Group and its members.”
A.M. Best Co. has commented that the ratings and positive outlook of Eastern Alliance Insurance Group (EAIG) and its members are unchanged following the recent announcement by EAIG’s holding company, Eastern Insurance Holdings, Inc. (EIHI), that fourth quarter 2008 results were impacted by reserve development at EAIG’s sister company, the Cayman Islands-based Eastern Re Ltd. S.P.C. EIHI’s run-off specialty reinsurance segment [See also International section]. EAIG consists of Eastern Alliance Insurance Company (EAIC), Allied Eastern Indemnity Company (AEIC), Eastern Advantage Assurance Company (EAAC) and Employers Security Insurance Company (ESIC) (Indianapolis, IN). Best also said that the ratings and stable outlook of Eastern Life and Health Insurance Company (ELH) are unchanged. Best noted that on April 18, 2008, it had affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating (ICR) of “a-” of EAIG and the ICR of “bbb-” of EIHI with a positive outlook on all ratings. Best also affirmed the FSR of ‘A-‘ (Excellent) and ICR of “a-” of ELH with a stable outlook, “based on EIHI’s agreement to guarantee the liabilities of ELH, as well as the company’s maintenance of a favorable level of risk-based capital.,” said the announcement. “All companies operate under an intercompany pooling agreement and are domiciled in Lancaster, PA, unless otherwise specified,” Best continued. “The magnitude of the reserve strengthening action requires a reallocation of capital within the organization to replenish capital at Eastern Re. The required capital will be sourced through both EAIG and ELH, each of which maintains sufficient capital relative to their current ratings to source this requirement.” Best added that” despite the significant deterioration in EIHI’s 2008 operating results following the required reserve strengthening at Eastern Re during fourth quarter 2008, EAIG and ELH continue to record strong operating results and solid capitalization, while, in particular, EAIG maintains an excellent underwriting performance, which outperforms its peers by a wide margin.”
A.M. Best Co. has downgraded the financial strength rating (FSR) to ‘B’ (Fair) from ‘B+’ (Good) and the issuer credit rating (ICR) to “bb” from “bbb-” of Grain Dealers Mutual Insurance Company of Indianapolis, and has assigned both ratings a negative outlook. “These rating actions reflect Grain Dealers’ deteriorated capital position, its history of volatile operating performance, uncertainty regarding its future pension liability and its ongoing exposure to weather-related losses,” Best explained. “Offsetting these negative rating factors are Grain Dealers’ efforts to lower its catastrophe losses and expand its catastrophe reinsurance program.” Best said the negative outlook reflects its “concerns that operating results remain subject to both weather-related and pension charges that could further negatively impact Grain Dealers risk-adjusted capitalization.”The dramatic loss of nearly 50 percent of the company’s surplus through year-end 2008 was driven by a combination of storm losses that did not individually reach the levels that would have triggered Grain Dealers’ reinsurance program, as well as sizable investment losses and unexpectedly high pension fund expenses. The significant drop off in investment earnings triggered the requirement for additional funding of the company’s defined benefit pension fund.”
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