A.M. Best Comments On National Interstate Corporation’s Planned Acquisition Of Vanliner Group, Inc.
A.M. Best Co. has commented that the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a+” of National Interstate Group (the group) (Richfield, OH) and its members and the ICR of “bbb+” of the group's publicly traded parent, National Interstate Corporation (National Interstate) (Richfield, OH) [NASDAQ: NATL] are unchanged. The outlook for these ratings is stable. (See below for a detailed listing of the companies.)
This commentary follows the recent announcement that the lead property/casualty insurance company of the group, National Interstate Insurance Company (NIIC), has entered into a definitive agreement to acquire Vanliner Group, Inc., and its wholly-owned property/casualty subsidiary, Vanliner Insurance Company (Vanliner) from UniGroup, Inc. The transaction is expected to close by the end of second quarter 2010 pending customary closing conditions and regulatory approvals.
Under the terms of the agreement National Interstate will pay approximately $125 - $135 million in cash, which represents Vanliner’s tangible book value at closing. As part of the definitive agreement, UniGroup, Inc. has agreed to provide National Interstate with comprehensive financial guarantees related to the run-off of Vanliner’s balance sheet following the close, whereby guaranteeing both favorable and unfavorable balance sheet development inures to UniGroup, Inc.
Vanliner is primarily a provider of insurance solutions to the moving and storage industry, which compliments National Interstate’s niche orientation and focus on the transportation industry. Subsequent to the planned acquisition, Vanliner is expected to be reinsured by NIIC and become a member of the group. The group maintains more than adequate risk-adjusted capital for its current ratings to fund the proposed transaction and the group is expected to maintain solid risk-adjusted capitalization post closing.The FSR of A (Excellent) and ICRs of “a+” are unchanged for National Interstate Group and its following members:
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