A.M. Best Co. has commented that the financial strength ratings (FSR) of ‘A-‘ (Excellent) and issuer credit ratings (ICR) of “a-” of the New York-based Tower Group Companies, its pooled members and Bermuda-based CastlePoint Reinsurance Company Limited are unchanged.
Best also indicated that the FSR of ‘B+’ (Good) and ICR of “bbb-” of Tower’s recently acquired CastlePoint National Insurance Company (formerly SUA Insurance Co.) of Chicago, “remain under review with positive implications, pending regulatory approval of its inclusion into the Tower Group Companies pool.”
Best said the ICR of “bbb-” of the publicly traded holding company, Tower Group, Inc. Is also unchanged following the announcement that Tower has entered into a definitive agreement to purchase the personal lines business of OneBeacon Insurance Group, Ltd. in a cash transaction valued at approximately $180 million.
Under the terms of the agreement, Tower would pay $78 million cash to acquire Massachusetts Homeland Insurance Company, York Insurance Co. of Maine, New Jersey Skylands Management LLC (an attorney-in-fact) and Adirondack AIF, LLC (an attorney-in-fact).
Best noted that, as part of the transaction, Tower would purchase approximately $103 million (an amount equal to the statutory surplus of the reciprocals) of surplus notes currently held by OneBeacon used to support the capitalization of two reciprocals, New Jersey Skylands Insurance Association and its wholly owned subsidiary, New Jersey Skylands Insurance Co. and also Adirondack Insurance Exchange.
The transaction is expected to close at the end of second quarter 2010.
Tower intends to provide affiliated reinsurance support to Mass Homeland and York in order for the acquired companies to receive the ratings of the Tower Group Companies pool, according to Best.
Source: A.M. Best – www.ambest.com
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