A.M. Best Revises Status to Under Review With Developing Implications for Majestic Capital, Ltd. and Its Subsidiaries
08 Noviembre 2010 - 12:57PM
Business Wire
A.M. Best Co. has revised the status of under review with
negative implications to under review with developing implications
for the financial strength rating (FSR) of B++ (Good) and issuer
credit rating (ICR) of “bbb” of Majestic Insurance Company
(San Francisco, CA), as well as the FSR of B+ (Good) and ICR of
“bbb-” of Twin Bridges (Bermuda) Ltd. (Hamilton,
Bermuda).
Concurrently, A.M. Best has revised the status of under review
with negative implications to under review with developing
implications for the ICRs of “bb” of both companies’ ultimate
parent, Majestic Capital, Ltd (Majestic Capital) (Hamilton,
Bermuda) [NASDAQ: MAJC], and its intermediate holding companies,
Embarcadero Insurance Holdings, Inc. (Embarcadero) (San
Francisco, CA) and Majestic USA Capital, Inc. (Majestic USA)
(Wilmington, DE). A.M. Best also has revised the status of under
review with negative implications to under review with developing
implications for the debt ratings of “b+” on the trust preferred
securities of Majestic USA and Embarcadero.
These rating actions follow Majestic Capital’s announcement on
September 21, 2010 that a definitive agreement was entered into
under which Majestic Capital will be acquired by Bayside Capital
Partners LLC (Bayside Capital Partners) for $0.45 per share in cash
or an aggregate purchase price of $7.8 million. Bayside Capital
Partners is a holding company, the principal member of which is
Lancer Financial Group, Inc. Additionally, Majestic Capital
has announced it has entered into a memorandum of understanding
with the State of New York on a proposed settlement to resolve the
claims by the State and certain lawsuits arising out of
Compensation Risk Managers, LLC’s, a subsidiary of Majestic
Capital, an administration of self-insured groups in New York.
The status of under review with developing implications reflects
the potential for a revision in the ratings and/or rating outlook
of the group based on the outcome of A.M. Best’s discussions with
management and the close of the transaction. However, the direction
of the revision cannot be determined based on the information that
A.M. Best has received to date. The ratings will remain under
review pending discussions with management, A.M. Best’s assessment
of the transaction and its effect on these regulated insurers. This
proposed transaction is expected to close in the first quarter of
2011 and is subject to regulatory approval.
The principal methodology used in determining these ratings is
Best’s Credit Rating Methodology -- Global Life and Non-Life
Insurance Edition, which provides a
comprehensive explanation of A.M. Best’s rating process and
highlights the different rating criteria employed. Additional key
criteria utilized include: “Risk Management and the Rating Process
for Insurance Companies”; “Understanding BCAR for Property/Casualty
Insurers”; “Rating Members of Insurance Groups”; and “A.M. Best’s
Ratings & the Treatment of Debt.” Methodologies can be found at
www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service
credit rating organization dedicated to serving the financial and
health care service industries, including insurance companies,
banks, hospitals and health care system providers. For more
information, visit www.ambest.com.
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