A.M. Best Co. has downgraded the financial strength rating to ‘A-‘ (Excellent) from ‘A’ (Excellent) and issuer credit rating to “a-” from “a” of Illinois-based Madison Mutual Insurance Company, and has revised the outlook for both ratings to stable from negative. The rating downgrades “reflect Madison Mutual’s poor underwriting performance over the near and long term and the company’s limited business profile,” Best explained. In addition Best pointed out that Madison Mutual “maintains elevated investment leverage, which exposes its surplus to equity market volatility. Madison Mutual has experienced significant underwriting losses over the past five years, with a five- and ten-year average combined ratio that is considerably worse than the private passenger auto and homeowners composite. Although the company has implemented underwriting performance initiatives, these measures have not resulted in material improvement in underwriting performance.” However, Best also noted that Madison Mutual “sustains a strong risk-adjusted capitalization, which is derived from its conservative underwriting leverage. Furthermore, Madison Mutual retains excellent liquidity measures, a favorable expense structure and has a long standing local market presence.”
A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of St. Louis-based Lyndon Property Insurance Company. Best said the ratings of Lyndon Property reflect its “solid capitalization, historically favorable operating performance in its core business of vehicle service contracts, the substantially reduced exposure to discontinued lines of business and the explicit and implicit support provided by its parent, Protective Life Corporation and its other subsidiaries.” As offsetting factors, Best cited the “increased loss severity in Lyndon Property’s recreational vehicle book of business and the inherent risks associated with the diversification into new markets and distribution channels.” Best said the revised outlook for Lyndon Property “reflects the outlook of Protective, which was revised to stable from negative in December 2010, following improvement in Protective’s risk-adjusted capitalization and earnings after these measures experienced significant declines during the 2008-09 financial market crisis.”
A.M. Best Co. has placed under review with developing implications the financial strength rating (FSR) of ‘B’ (Fair) and issuer credit rating (ICR) of “bb+” of Great Northwest Insurance Company (GNIC). Best has also placed under review with negative implications the FSR of ‘B+’ (Good) and ICR of “bbb-” of Hawaiian Insurance and Guaranty Company, Limited (HIG). Both entities are owned by the GNW Acquisition Corp (GNWAC), and all companies are headquartered in St. Paul, Minn. unless otherwise specified. The rating actions “follow the signing of a definitive merger agreement whereby all of the outstanding shares of GNWAC will be acquired by RM Ocean Harbor Holding, Inc. (RMOHHI) for $11.4 million in cash,” said Best. “GNIC’s under review with developing implications status reflects uncertainty of the impact of the acquisition upon GNIC’s ratings. HIG’s under review with negative implications status reflects the possible effects to its ratings as it is integrated with the insurance entities, which comprise the Ocean Harbor Insurance Group (OHIG), which are subsidiaries of RMOHHI. The ratings will remain under review pending further discussions with the managements of GNWAC and OHIG, as well as the conclusion of the agreement. GNWAC’s ICR of “b” is unaffected by the pending merger.”
A.M. Best Co. has placed under review with negative implications the financial strength rating of ‘B+’ (Good) and issuer credit rating of “bbb-” of New York-based Ocean Harbor Insurance Group (OHIG), whose leading operating company is Tallahassee, Fla.-based Ocean Harbor Casualty Insurance Company (OHCIC). Best explained that the rating actions “follow the signing of a definitive merger agreement whereby OHIG’s parent, RM Ocean Harbor Holding, Inc. (RMOHHI) will acquire all of the outstanding shares of GNW Acquisition, Corp (GNWAC) [See above]. Under the terms of the agreement, RMOHHI will pay $11.4 million in cash for GNWAC.
The under review status of OHIG reflects the potential decline in its risk-adjusted capitalization, increased debt and the challenge for management to successfully integrate the underwriting operations, personnel and systems of GNWAC’s insurance operation into OHIG.
OHIG’s ratings will remain under review pending regulatory approvals, closing of the transaction and A.M. Best’s further discussions with management.”
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