A.M. Best Places Ratings of American Continental Insurance Co. and Unionamerica Insurance Co. Under Review

Strategic Insights -

The rating action follows a definitive agreement between St. Paul Cos. and MMI Cos. for a $200 million acquisition, creating the largest global integrated provider of insurance and risk management services for the health-care industry, with approximately $1 billion annually in premiums and fees from health-care customers. The acquisition is subject to regulatory approval and is expected to close in the second quarter of 2000. A.M. Best will further analyze the transaction and integration of the operations during the under review period.

Key Takeaways:

  • A.M. Best has placed the A (Excellent) ratings of American Continental Insurance Co. and Unionamerica Insurance Co. Ltd. under review with developing implications following St. Paul Cos.' acquisition of MMI Cos. for $200 million.
  • The acquisition creates the largest global integrated provider of insurance and risk management services for the health-care industry, generating approximately $1 billion annually in premiums and fees from health-care customers.
  • The ratings will remain under review pending the formal close of the transaction and a review of the integration of the two MMI companies into St. Paul's legal and management structure.
  • The transaction is subject to regulatory approval and is expected to close in the second quarter of 2000.
  • If the transaction is not completed, A.M. Best may lower the Best's Ratings for American Continental Insurance Co. and Unionamerica Insurance Co. Ltd. due to MMI Cos.' weakened financial condition following a $105 million reserve and restructuring charge in the third quarter.
  • A.M. Best will further analyze the transaction and integration of the operations during the under review period, communicating with management of the St. Paul Cos. and MMI Cos.
  • The ratings of the St. Paul Cos. and its affiliates are not affected by this transaction.

Statistics:

  • A.M. Best places the following ratings under review:

+ American Continental Insurance Co.

+ Unionamerica Insurance Co. Ltd.

  • The acquisition value is $200 million.
  • The generated annual revenue is approximately $1 billion.
  • The expected close of the transaction is in the second quarter of 2000.
  • The third-quarter reserve and restructuring charge is $105 million.

Sources:

  • A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.
  • American Continental Insurance Co., Kansas City, Mo.
  • Unionamerica Insurance Co. Ltd., London
  • St. Paul Cos.
  • MMI Cos., Deerfield, Ill.
  • BUSINESS WIRE, Dec. 22, 1999
  • A.M. Best's Web site: www.ambest.com