CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JANUARY 26, 2005 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength ratings of A- (Excellent) of the Penn-America Group, Inc. (Penn-America) (Hatboro, PA). At the same time, A.M. Best has removed the ratings from under review and assigned Penn-America a positive outlook. The ratings had been placed under review with developing implications pending the merger with United National Group Ltd., which was later renamed United America Indemnity, Ltd. [NASDAQ: UNGL].
This rating action follows yesterday's announcement by United America Indemnity that its merger with Penn-America Group, Inc. has been completed. As part of the transaction, United America Indemnity also completed its acquisition of Penn Independent Corporation for approximately $97 million in cash.
Under the terms of the merger agreement, Penn-America shareholders received $15.375 of value for each share of Penn-America common stock as follows: (1) 0.7756 of a Class A common share of United America Indemnity based on $13.875 divided by the volume-weighted average sales price of United America Indemnity's Class A common shares for the 20 consecutive trading days ending January 21, 2005, which was $17.89, and (2) $1.50 in cash.
Trading of United America Indemnity Class A common shares continues on the NASDAQ stock market under the trading symbol, UNGL. Shares of Penn-America common stock were de-listed from trading on the New York Stock Exchange following the close on January 24, 2005.
The Penn-America rating currently carries a positive outlook, which indicates the potential future direction of the rating over an intermediate period, generally defined as 12 to 36 months. This positive rating outlook was assigned to Penn-America in February 2004.
Under United America Indemnity's ownership, Penn-America will retain its existing corporate identity with its operations managed by its existing management team. While maintaining separate and distinct pools, this merger is not expected to afford expense savings to the insurance subsidiaries through integration. However, the new combined organization should benefit from better overall business diversification, geographic spread and enhanced financial flexibility. The new combined organization would rank among the top 15 largest writers of excess and surplus lines premium in the United States. As of September 30, 2004, pro forma consolidated GAAP equity for these two groups totaled $559 million.
The financial strength ratings of A- (Excellent) were affirmed for the following subsidiaries of Penn-America Group:
- Penn-America Insurance Company
- Penn-Star Insurance Company
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