A.M. Best Places Ratings of Preserver Group, Inc.'s Subsidiaries Under Review with Positive Implications.OLDWICK, N.J. -- A.M. Best Co. has placed the financial strength ratings of B++ (Very Good) of Preserver Insurance Group (Preserver Insurance) (Paramus, NJ) and its members, Preserver Insurance Company (New Jersey) and Mountain Valley Indemnity Company (New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). ) as well as the separately rated affiliate, North East Insurance Company (North East) (Scarborough, ME) under review with positive rating implications. Additionally, A.M. Best has assigned issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "bbb" to all the above entities, placing the ICRs also under review with positive implications. These rating actions follow the planned acquisition of Preserver Group, Inc. (Preserver) by Tower Group, Inc. (Tower) (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY) (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : TWGP), which is expected to close in first quarter 2007. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the definitive purchased agreement, Tower will acquire the outstanding stock of Preserver for a cash consideration of approximately $68 million, with a portion to be allocated to repay all shareholder-owned debt. In addition, Tower will assume $12 million of trust preferred securities previously issued by Preserver. Preserver is a privately held company privately held company A firm whose shares are held within a relatively small circle of owners and are not traded publicly. that writes primarily small commercial and personal lines insurance in the Northeast. Tower, through its subsidiaries, offers both commercial and personal lines insurance coverages to small to mid-size businesses and individuals, primarily in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . Preserver consists of Preserver Insurance and North East. Following the proposed merger, all three Preserver companies are expected to be pooled with existing Tower operating companies, and 75% of Preserver's net outstanding loss reserves will be reinsured through a loss portfolio transfer (LPT LPT - /L-P-T/ or /lip'it/ or /lip-it'/ Line printer. Rare under Unix, more common among hackers who grew up with ITS, MS-DOS, CP/M and other operating systems that were strongly influenced by early DEC conventions. ) with CastlePoint Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Company Limited (CastlePoint Re), a Bermuda reinsurance company previously sponsored by Tower in 2006. The positive rating implications consider the synergistic benefits afforded by being part of Tower, the advantages gained from having greater scale and geographic diversification, the planned LPT to be provided by CastlePoint (contemporaneous with the closing) and the alleviated concerns with regard to Preserver's high financial leverage. Tower's ratings remain unchanged as the acquisition of Preserver provides Tower with immediate access to approximately $100 million of premium revenue, access to more than 300 additional retail agents, while enhancing its footprint in the Northeast. This acquisition also fits in with Tower's opportunistic growth strategy and its proven track record of growing its business through renewal rights and/or acquisitions. Tower is funding this acquisition through CastlePoint Re's $40 million investment in Tower via convertible perpetual preferred securities issued by Tower, as well as Tower's recent shelf filing to issue $55 million of equity securities. While there is execution risk with regard to financing this acquisition, should these events not materialize, A.M. Best will need to reassess the capitalization of Tower. In conjunction with this transaction, the ratings of CastlePoint Re remain unchanged. Although CastlePoint Re will be providing LPT coverage to Tower, the assumption of these reserves will be accompanied by an equivalent amount of assets. CastlePoint Re's pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma risk-adjusted capitalization remains strong after considering the financial implications from the planned LPT. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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