A.M. Best Places Ratings of Continental General Insurance Company & United Teacher Associates Insurance Company Under Review ...
April 15 2015 - 2:39PM
Business Wire
A.M. Best has placed under review with negative
implications the financial strength ratings of B++ (Good) and the
issuer credit ratings of “bbb” of Continental General Insurance
Company (Continental) and United Teacher Associates
Insurance Company (UTA). Both companies are headquartered in
Austin, TX.
The rating actions follow the announcement by parent company,
American Financial Group, Inc. (AFG) [NYSE/Nasdaq: AFG],
that it has reached a definitive agreement to sell Continental and
UTA, which contain all of AFG’s run-off long-term care insurance
business, to HC2 Holdings, Inc. (HCHC) for an initial payment of $7
million in cash and HCHC securities, subject to adjustment based on
certain items, including operating results through the closing
date. In addition, AFG may also receive up to $13 million of
additional proceeds in the future based on the release of certain
statutory liabilities. Continental and UTA contain all of AFG’s
$800 million in net GAAP long-term care insurance reserves, as well
as nearly $300 million of net GAAP annuity and life insurance
reserves. The transaction had no ratings impact on AFG’s other life
and annuity companies.
The ratings of Continental and UTA reflect A.M. Best’s current
view of each company’s current credit profile, while the under
review status with negative implications reflects the uncertainty
over the future financial and strategic direction of the companies
under its prospective new ownership, as well as the relatively weak
credit profile of HCHC based upon its current leverage position and
debt ratings issued by other Nationally Recognized Statistical
Rating Organizations (NRSROs).
The transaction is expected to close in the third quarter of
2015, subject to customary conditions, including receipt of
required regulatory approvals. The ratings will be removed from
under review following the close of the transaction and A.M. Best’s
discussions with the management of HCHC. Negative rating actions
could occur if there is a deterioration of A.M. Best’s view of the
stand alone credit profiles of the companies between now and the
time the transaction closes, or if A.M. Best believes that the
credit profile of HCHC is weak enough to warrant rating drag.
The methodology used in determining these ratings is Best’s
Credit Rating Methodology, which provides a comprehensive
explanation of A.M. Best’s rating process and contains the
different rating criteria employed in the rating process. Best’s
Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Rating Members of Insurance Groups
- Evaluating Non-Insurance Ultimate
Parents
This press release relates to rating(s) that have been
published on A.M. 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 visit A.M.
Best’s Ratings & Criteria Center.
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 © 2015 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
A.M. BestTom Zitelli, 908-439-2200, ext.
5412Senior Financial
Analysttom.zitelli@ambest.comorTom Rosendale, 908-439-2200,
ext. 5201Assistant Vice
Presidentthomas.rosendale@ambest.comorChristopher Sharkey,
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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