A.M. Best Co. has commented that the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of “a” of the property/casualty subsidiaries of Eastern Insurance Holdings, Inc. (EIHI) [NASDAQ: EIHI] (collectively referred to as Eastern Alliance Insurance Group [EAIG]), as well as Eastern Re Ltd. SPC (Eastern Re) (Grand Cayman, Cayman Islands) are unchanged. Concurrently, A.M. Best has commented that the ICR of “bbb” of EIHI is unchanged.
This comment follows EIHI’s joint announcement today with ProAssurance Corporation (ProAssurance) (Birmingham, AL) [NYSE: PRA] that EIHI will merge with a newly formed subsidiary of ProAssurance. All companies are domiciled in Lancaster, PA unless otherwise specified.
The all-cash transaction, with an aggregate value of approximately $205 million, will result in EIHI becoming a wholly owned subsidiary of ProAssurance. The transaction is expected to close effective January 1, 2014, subject to customary closing conditions, including regulatory and EIHI shareholder approval.
ProAssurance is an industry-leading specialty insurance company with expertise in medical professional liability (approximately 88% of net premiums written), products liability for medical technology and life sciences (6%) and legal professional liability (6%). EIHI operates through its subsidiaries as a domestic property casualty group specializing in workers’ compensation products and services and segregated portfolio cell reinsurance business.ProAssurance views the acquisition of EIHI as a means of continuing to build its insurance platform. Additionally, ProAssurance views EIHI as a best-in-class workers’ compensation specialist with a proven track record of growth and profitability that will allow it to broaden the products it is able to offer existing customers and diversify its product line. EIH will retain its corporate, regional and satellite offices, and its senior executives have agreed to enter into long-term contracts in conjunction with the transaction. While there are some execution risks involved in integrating EAIG and Eastern Re into the ProAssurance organization, the companies will be members of a larger, strongly capitalized and higher-rated organization and should realize some economies of scale.