A.M. Best Puts Trenwick, Chartwell Under Review.OLDWICK, N.J.--(BUSINESS WIRE)--June 22, 1999-- A.M. Best Co. today placed the A+ (Superior) rating of Trenwick America 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. Corp. and the A (Excellent) rating of Chartwell Reinsurance Co. under review with developing implications. Two other affiliates have also had their ratings placed under review with developing implications: Trenwick International Ltd., London, A, and the Insurance Corp. of 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 Group, A-. These actions follow today's announcement that Trenwick Group Inc. has entered into a definitive agreement to acquire Chartwell Re Corp. in a stock-for-stock transaction. This transaction is expected to strengthen Trenwick's reinsurance market position in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and the United Kingdom and accelerate premium growth. The combined entity will rank among the top ten reinsurers in the United States in terms of surplus. The under review status reflects the uncertainties and potential business disruption associated with the transaction, including business overlap and management retention. A.M. Best is also concerned with both reinsurers' recent market share erosion and lower earnings because of intense price competition. Further rating concerns relate to the pending reorganization and consolidation of Chartwell's syndicates at Lloyd's, and Trenwick's purchase of a lower-rated reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. . Following the transaction, Trenwick Group Inc.'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 financial leverage is expected to remain high at 34% (debt plus preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. to total capital). As part of the transaction, Chartwell will purchase $100 million of reserve indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from , covering all carried reserves (including Lloyd's business) prior to closing. The ratings will remain under review pending the close of the transaction and discussions with management regarding integration plans, pro forma financials and strategic business plans. Upon the close of the transaction the reinsurance companies' ratings will likely be equalized. The acquisition is expected to close during the fourth quarter of 1999 and is subject to regulatory approvals. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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