A.M. Best Places Ratings of Penn Millers Holdings Corporation and Its Subsidiaries Under Review With Positive Implications
09 Septiembre 2011 - 2:18PM
Business Wire
A.M. Best Co. has placed under review with positive
implications the financial strength rating (FSR) of A- (Excellent)
and issuer credit ratings (ICR) of “a-” of Penn Millers
Insurance Group (Penn Millers), which includes the Penn
Millers Insurance Company. Concurrently, A.M. Best has placed
under review with positive implications the FSR of B++ (Good) and
ICR of “bbb+” of Penn Millers’ wholly owned, but separately rated
affiliate, American Millers Insurance Company (American
Millers). In addition, A.M. Best has placed under review with
positive implications the ICR of “bbb-” of the publicly traded
holding company parent, Penn Millers Holdings Corporation
(Penn Millers Holdings) (NASDAQ: PMIC). All companies are domiciled
in Wilkes Barre, PA.
These rating actions follow the recent announcement that Penn
Millers Holdings has entered into a definitive agreement to be
acquired by a subsidiary of ACE Limited (ACE) (Zurich,
Switzerland) [NYSE:ACE]. ACE has agreed to purchase Penn Millers
Holdings for $20.50 per share in cash. The transaction will provide
ACE with an established specialty niche business that complements
its current agricultural market offerings through the Rain and Hail
crop insurance and ACE Westchester excess and surplus business
lines. In turn, the transaction will expand Penn Millers’
distribution network for its agricultural related insurance
products. While some execution risks exist in integrating Penn
Millers into ACE, Penn Millers will be a member of a large,
diversified, strongly capitalized and highly rated organization,
and the company is expected to realize economies of scale that will
lower its elevated expense ratio.
The under review with positive implications’ status is based on
the increased financial wherewithal and resources that will be
available to Penn Millers as a result of the transaction and its
affiliation with ACE, which had total capital of $29.2 billion
through the end of second quarter 2011.
The ratings will remain under review pending the completion of
the transaction, regulatory approvals and A.M. Best’s discussions
with Penn Millers and ACE management. This transaction is expected
to close by the end of the first quarter of 2012.
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”; and “Rating Members of Insurance Groups.” Methodologies
can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and
most authoritative insurance rating and information source. For
more information, visit www.ambest.com.
Copyright © 2011 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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