A.M. Best Co. has upgraded the financial strength rating (FSR) to ‘A+’ (Superior) from ‘A-‘ (Excellent) and issuer credit rating (ICR) to “aa-” from “a-” of Montpelier US Insurance Company (MUSIC). Best also removed both ratings from under review with positive implications and has assigned a negative outlook. These rating actions “follow the acquisition of MUSIC by Selective Insurance Group, Inc. completed December 31, 2011, as well as the execution of an updated pooling agreement under which MUSIC has become a member of the pool led by Selective Insurance Company of America (SICA),” Best explained. Best affirmed the FSR of ‘A+’ (Superior) and ICRs of “aa-” of Selective Insurance Group and its seven property/casualty pooling members on May 27, 2011. The outlook for these ratings is negative.
A.M. Best Co. has placed under review with positive implications the financial strength rating of ‘B-‘ (Fair) and issuer credit rating of “bb-” of Omaha-based Medico Insurance Company, a wholly owned subsidiary of the Medico Mutual Insurance Holding Company. The rating actions reflect the announcement of American Enterprise Group, Inc.’s “intent to have Medico join the American Enterprise Mutual Holding Company organization,” Best explained. American Republic Insurance Company is the lead company of American Enterprise. The transaction is anticipated to close by June 30, 2012, pending the conclusion of a satisfactory due diligence process, as well as the approval of the members of Medico Mutual Insurance Holding Company and regulatory approvals. Best said it “believes Medico will benefit from being part of American Enterprise, which has considerable financial resources and is a recognized name in the Medicare supplement market. Medico will continue to market senior life/health insurance products, including Medicare supplement insurance through its independent field force. Medico’s ratings will remain under review with positive implications until the transaction is completed.”
A.M. Best Co. has downgraded the financial strength rating to ‘C’ (Weak) from ‘A-‘ (Excellent) and issuer credit rating to “ccc” from “a-” of Penna.-based First Sealord Surety, Inc. (FSSI), and has maintained their under review status with negative implications. The rating actions “reflect the increased uncertainty that FSSI’s stock purchase agreement with Torus National Insurance Company, originally scheduled for January 2011, will close.” Best also said it expects a “significant deterioration in FSSI’s financial condition during the fourth quarter of 2011. The ratings were placed under review with negative implications on December 2, 2011, reflective of a significant decline in the company’s capitalization as of September 30, 2011, which was driven by reserve strengthening on prior accident years and the potential for additional deterioration in FSSI’s financial condition. As a result, the company implemented a quota share reinsurance agreement intended to provide immediate capital relief. FSSI also entered into a stock purchase agreement with Torus, which would have ultimately improved its financial condition. The ratings will remain under review pending discussions with management to accurately assess the financial condition of FSSI. If the transaction with Torus does not close or other capital replenishment initiatives do not materialize, further negative rating pressure is probable.”
A.M. Best Co. has affirmed the financial strength rating of ‘B++’ (Good) and issuer credit rating of “bbb” of Denver-based Pathfinder Insurance Company, both with stable outlooks. Best said the ratings reflect Pathfinder’s “strong capitalization, as reflected in its high Best’s Capital Adequacy Ratio (BCAR), and its historically high profitability. Pathfinder is authorized to do business in 43 states and the District of Columbia.” Best also explained that Pathfinder does not write insurance policies for the general public. Rather, it is “a vehicle used by its ultimate parent, Avis Budget Group, Inc. to assure that to the extent possible, ABG maintains uninterrupted third party liability insurance on its automobiles that are registered in jurisdictions in which Pathfinder operates. While Pathfinder may not regularly write business, it continues to serve an important function as a backstop third party liability insurer for ABG vehicles in those jurisdictions that Pathfinder is registered.” As offsetting factors, Best cited Pathfinder’s “limited scope of business and its dependence on ABG for business generation. Pathfinder continues to have minimal losses due to the structure of coverage provided by ABG and its strict risk management program. The ratings also consider Pathfinder’s strategic value in providing automobile liability insurance for a portion of ABG’s corporately owned rental fleets. The ratings also recognize the overall financial and credit ratings of ABG. While the outlook for Pathfinder’s ratings is stable, positive rating actions could occur if there is a sustainable long-term improvement in the operating performance and capital strength of ABG, with the requisite results in the captive insurer. Negative rating actions could be the result of material operational and performance issues with Pathfinder and ABG.”
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