Best’s News & Research Service - May 26, 2023 02:30 PM (EDT)
AM Best Places Credit Ratings of Independent Specialty Insurance Co Under Review with Negative Implications Pending Planned Sale
- May 26, 2023 02:30 PM (EDT)
Oldwick //BestWire// - AM Best has placed under review with negative implications the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” (Excellent) of Independent Specialty Insurance Company (ISIC) (Dover, DE).
These Credit Rating (rating) actions follow the recent disclosure that ISIC’s direct parent, United Specialty Insurance Company (USIC) – a member of State National Group, a division of Markel Group Inc. – has entered into a definitive stock purchase agreement to sell its 100% ownership in ISIC to Velocity Holdco, LLC (Velocity). The transaction is subject to regulatory approvals.
Prior to the closing of the acquisition, a loss portfolio transfer (LPT) contract will be executed between USIC, ISIC and Velocity whereby USIC will reinsure all pre-closing insurance liabilities attributable to ISIC. As part of the LPT contract, USIC’s parent, State National Insurance Company, Inc., will guarantee USIC’s obligations. In addition, effective Jan. 1, 2023, State National Insurance Company, Inc. and its subsidiaries executed an amendment to its inter-company pooling agreement, which reduced ISIC’s participation in the pool to 0%.
At the completion of the acquisition, there is a high likelihood of negative rating action, potentially of one or more notches for both the FSR and Long-Term ICR, as a result of ISIC no longer being part of the intercompany pooling agreement with State National Group.
The ratings will remain under review until the close of the transaction and an assessment by AM Best of new ownership’s strategic business plans.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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.