Best’s News & Research Service - March 25, 2022 04:52 PM (EDT)
AM Best Comments on Credit Ratings of Michigan Professional Insurance Exchange Following Acquisition Announcement
- March 25, 2022 04:52 PM (EDT)
Oldwick //BestWire// - AM Best has commented that the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of Michigan Professional Insurance Exchange (MPIE) remain unchanged following the recent announcement of its pending acquisition by MMIC Insurance, Inc. (MMIC), and its parent company, Constellation, Inc. (Constellation). The transaction, subject to customary closing conditions and regulatory approvals, is expected to close in third-quarter 2022. MPIE is domiciled in Michigan.
On March 25, 2022, MMIC announced that it has entered into a definitive agreement under which MPIE will cede its loss reserves through a loss portfolio transfer (LPT) agreement and enter into a quota share and renewal rights agreement with MMIC for MPIE’s future business.
Under the LPT, MPIE will cede 100% of its loss and loss adjustment expense reserves to MMIC. Concurrent with the LPT, MPIE will execute a go forward 100% quota share and renewal rights agreement with MMIC. MPIE will pay MMIC 100% of premium and MMIC will assume 100% of ongoing losses and loss adjustment expenses and 100% of existing unearned premium reserves. Both parties will execute an asset purchase agreement. Constellation Solution, Inc., a subsidiary of Constellation, will purchase the assets of MPIE and the membership interests of its subsidiary companies, PRCD Inc. and MPIE Consulting dba ERC Risk Solutions, LLC.
It is anticipated that upon the conclusion of the various agreements and business transfers, the ratings of MPIE will move to a non-rated status given the effective discontinuation of its operations within the current legal entity. Throughout the transaction period, minimal operational or financial changes are anticipated. As is customary, AM Best will continue to monitor MPIE’ risk-adjusted capitalization, operating performance, business profile and enterprise risk management.
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 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 specialising 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.