A.M. Best Places State Auto National Insurance Company Under Review With Negative Implications
10 August 2010 - 11:30PM
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 “aa-” 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 Auto’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 “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 National’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 Best’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.
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