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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 04, 2017 03:05 PM (EDT)
A.M. Best has commented that the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Rating of “aa+” of HCC Life Insurance Company (HCC Life) (Indianapolis, IN) remain unchanged following the announcement that Tokio Marine HCC has reached a definitive agreement to acquire the medical stop-loss (MSL) operations of American International Group, Inc. through its wholly owned subsidiary, HCC Life.
The acquisition, which includes renewal rights, inforce business and employees, will increase HCC Life’s MSL premiums by approximately one-third to over $1.3 billion, making it one of the top three largest carriers in the industry. In addition to the MSL block of business, HCC Life also will acquire a smaller block of organ transplant business, which represents approximately 10% of the total amount of business being acquired in the transaction. HCC Life will fund the acquisition with existing capital and surplus. As a result, HCC Life’s risk-adjusted capitalization will decline to below targeted levels. However, A.M. Best expects that the decline in risk-adjusted capitalization will be temporary, as the acquisition is expected to be accretive to earnings. In addition, the Tokio Marine HCC organization maintains a solid balance sheet position, and HCC Life can depend on its vast financial resources, should it need additional capital support.
A.M. Best believes that there is a limited amount of execution risk, as the acquiring block has a similar profile to HCC Life’s existing business lines, which the company maintains knowledge and expertise in. In addition, the business will be transitioned to HCC Life’s own paper, as the company maintains all the necessary licenses for writing MSL business. The transaction is expected to close on Oct. 15, 2017.
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