A.M. Best Places Ratings Of Michigan Insurance Company Under Review With Negative Implications
A.M. Best Co. has placed under review with negative implications the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a” of Michigan Insurance Company (MIC) (Grand Rapids, MI). The ratings will remain under review pending regulatory review, approval and the completion of A.M. Best’s analytical process. The ratings being placed under review with negative implications indicates that they either will be downgraded or affirmed, depending upon A.M. Best’s view of the level of support to be provided by MIC’s new parent, Donegal Group Inc. (Donegal) (Marietta, PA) [NASDAQ: DGICA, DGICB].
On July 16, 2010, Donegal announced it has agreed to acquire all of the outstanding stock of MIC for approximately $39 million. MIC is over 80% owned by West Bend Mutual Insurance Company (West Bend) (West Bend, WI). The FSR of A (Excellent) and ICR of “a+” of West Bend are not impacted by this transaction.
MIC’s ratings consider the support it receives from West Bend, including West Bend’s assumption of 75% of all business written by MIC under a quota share arrangement. Furthermore, West Bend has extended a $5 million surplus note to MIC that has no repayment or interest payment requirements. The acquisition of MIC includes the purchase of the surplus note from West Bend. While MIC will continue to cede 75% of its business, Donegal Mutual Insurance Company (Donegal Mutual) (Marietta, PA) is expected to assume 25% with third party reinsurers assuming the other 50%. Business currently ceded to West Bend will remain with West Bend until the natural expiration of those policies and associated reserves. MIC also will continue to benefit from West Bend’s third party reinsurance arrangements through year-end 2010.
West Bend formed the group in late 1997 to write indigenous business exclusively in Michigan. MIC writes personal auto, homeowners, commercial auto, commercial package and workers’ compensation insurance. Business is produced through approximately 170 independent agents, the majority of whom currently have an ownership stake in the company.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV