Business & Finance
Business and Finance
Business and Finance
Tue, August 10, 2010 A.M. Best Places State Auto National Insurance Company Under Review With Negative Implications
OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has placed under review with negative implications the financial strength rating (FSR) of A+ (Superior) and issuer credit rating (ICR) of aaa-a of State Auto National Insurance Company (State Auto National) (Columbus, OH). State Auto National is a member of the State Auto Insurance Companies (State Auto), both of which are part of the State Auto Financial Corporation (STFC) (NASDAQ: STFC).
The rating actions are a result of State Autoa™s announcement of its definitive agreement to sell State Auto National to Hallmark Insurance Company (Hallmark) (Phoenix, AZ), which has an FSR of A- (Excellent) and an ICR of aa-a. A.M. Best anticipates that upon the close of the transaction, State Auto National will participate in an inter-company pooling agreement with Hallmark, which should result in a downgrading of State Auto Nationala™s ratings.
Currently, State Auto National operates under an inter-company pooling agreement as part of State Auto. The transaction is structured as a stock sale with State Auto retaining liability for the pre-closing book of business. Under a quota share reinsurance agreement and loss portfolio transfer agreement, which will be effective at closing, State Auto will continue to provide policy and claims service to current State Auto National policyholders until the policies are renewed with Hallmark following a six-month transition period. Accordingly, State Auto National will maintain its group ratings as a member of State Auto until the close of the transaction. The ratings for State Auto and its members are unchanged.
For Besta™s Credit Ratings, an overview of the rating process and rating methodologies, please visit [ www.ambest.com/ratings ].
The principal methodology used in determining these ratings is [ Best's Credit Rating Methodology - Global Life & Non-Life Insurance Edition. ]Additional methodologies that may apply 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 ].
