FEBRUARY 02, 2010 12:00 AM (EST)
A.M. Best Comments on Tower Group, Inc.'s Planned Acquisition of OneBeacon's Personal Lines Business
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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - FEBRUARY 02, 2010 12:00 AM (EST)
A.M. Best Co. has commented that the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Tower Group Companies (New York, NY), its pooled members and CastlePoint Reinsurance Company Limited (Bermuda) are unchanged. A.M. Best also has commented that the FSR of B+ (Good) and ICR of "bbb-" of Tower's recently acquired CastlePoint National Insurance Company (formerly SUA Insurance Company) (Chicago, IL) remain under review with positive implications, pending regulatory approval of its inclusion into the Tower Group Companies pool.
Additionally, A.M. Best has commented that the ICR of "bbb-" of the publicly traded holding company, Tower Group, Inc. (Tower) (headquartered in New York) [NASDAQ: TWGP], also is unchanged following the announcement that Tower has entered into a definitive agreement to purchase the personal lines business of OneBeacon Insurance Group, Ltd. (OneBeacon) in a cash transaction valued at approximately $180 million.
Under the terms of the agreement, Tower would pay $78 million cash to acquire Massachusetts Homeland Insurance Company (Mass Homeland), York Insurance Company of Maine (York), New Jersey Skylands Management LLC (an attorney-in-fact) and Adirondack AIF, LLC (an attorney-in-fact). As part of the transaction, Tower would purchase approximately $103 million (an amount equal to the statutory surplus of the reciprocals) of surplus notes currently held by OneBeacon used to support the capitalization of two reciprocals, New Jersey Skylands Insurance Association and its wholly owned subsidiary, New Jersey Skylands Insurance Company and also Adirondack Insurance Exchange, which are managed by the aforementioned attorneys-in-fact. The transaction is expected to close at the end of second quarter 2010. Tower intends to provide affiliated reinsurance support to Mass Homeland and York in order for the acquired companies to receive the ratings of the Tower Group Companies pool.
Tower believes the acquisition enhances its business profile in the personal lines business segment, and that a profitable and seasoned book of business together with an experienced management team and established systems and infrastructure will provide an opportunity for reliable growth.
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The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
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