CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 18, 2007 12:00 AM (EDT)
A.M. Best Co. has placed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of American Modern Insurance Group (American Modern) and its property/casualty members under review with negative implications.
In addition, A.M. Best has placed the FSR of A- (Excellent) and ICR of "a-" and the FSR B++ (Good) and ICR of "bbb" of American Modern Life Insurance Company (American Modern Life) (Cincinnati, OH), the lead life insurer within American Modern and Southern Pioneer Life Insurance Company (Trumann, AK), under review with developing implications, respectively.
Concurrently, A.M. Best has placed the ICR of "a-" and debt ratings of "a-" on senior debt, "bbb+" on subordinated debt and "bbb" on preferred stock of the $150 million shelf registration under review with negative implications, which was filed by American Modern's ultimate parent, The Midland Company (Midland) (Amelia, OH) [NASDAQ: MLAN]. (See below for a detailed list of the companies and ratings.)
These rating actions follow the announcement that Midland has signed a definitive merger agreement with Munich-American Holding Corporation (Munich-American) (Delaware), which will result in Munich-American acquiring all of Midland's outstanding stock. As a result, Midland would become an affiliate of Munich Re America Corporation (New Jersey), the parent holding company of Munich Reinsurance America, Inc. (Delaware).
These rating actions further reflect A.M. Best's viewpoint concerning the uncertainties, which may exist relative to the long-term strategic implications for American Modern following this transaction. While it is anticipated that American Modern is expected to continue to maintain a favorable operating performance, A.M. Best remains concerned regarding potential long-term growth initiatives. However, as American Modern's existing senior management will continue in their current capacity, combined with the financial flexibility afforded by Munich Reinsurance Company (Germany), the ultimate parent company, A.M. Best expects minimal near-term impact operationally to American Modern. Therefore, it is anticipated that the ratings of American Modern will be affirmed once shareholder and regulatory approvals are received, in conjunction with A.M. Best conducting further due diligence regarding this transaction. Furthermore, A.M. Best will review with management the strategic role that the life companies will play under their new ownership structure to determine the impact on the ratings of the life operations.
The FSR of A+ (Superior) and ICRs of "aa-" have been placed under review with negative implications for American Modern Insurance Group and its following members:
- American Modern Home Insurance Company
- American Family Home Insurance Company
- American Southern Home Insurance Company
- American Western Home Insurance Company
- American Modern Select Insurance Company
- American Modern Lloyds Insurance Company
- American Modern Insurance Company of Florida Incorporated
- American Modern Surplus Lines Insurance Company
The FSR of A- (Excellent) and the ICR of "a-" have been placed under review with
developing implications for American Modern Life Insurance Company.
The FSR of B ++ (Good) and the ICR of "bbb" have been placed under review with developing implications for Southern Pioneer Life Insurance Company.
The ICR of "a-" has been placed under review with negative implications for The Midland Company.
The following debt ratings have been placed under review with negative implications for the $150 million shelf registration:
The Midland Company-
-"a-" on senior unsecured debt
-"bbb+" on subordinated debt
-"bbb" on preferred stock
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.