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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 19, 2021 05:09 PM (EDT)
AM Best has placed under review with developing implications the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of StarStone Specialty Insurance Company and StarStone National Insurance Company, which are both domiciled in Wilmington, DE and subsidiaries of Core Specialty Insurance Holdings, Inc. (Core Specialty).
This Credit Rating (rating) action follows the recent announcement that Core Specialty will combine with the Lancer Insurance Group through a cash and stock deal, structured as a merger. The Lancer Insurance Group is comprised of Lancer Indemnity Company (Long Beach, NY), Lancer Insurance Company (Chicago, IL) and Lancer Insurance Company of New Jersey (Ewing, NJ). While Lancer Indemnity Company is currently a member of the Lancer Insurance Group, it is not being sold and is not part of the merger agreement.
The merger was unanimously approved by both companies’ Board of Directors and is expected to be completed during the third quarter of 2021, subject to customary regulatory approvals. The under review with developing implications status reflects the potential execution risks associated with the two group’s merging, the need for AM Best to fully assess the financial and operational impacts of the merger, offset by the potential synergies recognized from this transaction. Given Core Specialty being in the early stages of a recapitalization plan, the relative rating of Lancer Insurance Group and the potential execution risk related to the merger of the organizations, AM Best does not anticipate positive rating movement at the immediate close of the merger.
However, AM Best does anticipate that the diversification of the business profile and the fortified management team could favorably impact rating dynamics as the new combined business model matures.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.