CastlePoint Insurance CompanyCastlePoint National Insurance CompanyTower Insurance Company of New YorkTower National Insurance CompanyPreserver Insurance CompanyNorth East Insurance CompanyHermitage Insurance CompanyCastlePoint Florida Insurance CompanyKodiak Insurance CompanyYork Insurance Company of MaineMassachusetts Homeland Insurance Company
OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best has downgraded the financial strength ratings to C
(Weak) from C++ (Marginal) and the issuer credit ratings (ICR) to “ccc”
from “b” of the pooled and reinsured members of the Tower US Pool
(Tower) and CastlePoint Reinsurance Company, Limited (Bermuda).
Concurrently, A.M. Best has downgraded the ICR to “c” from “cc” and the
debt rating on the $150 million par 5.00% senior unsecured convertible
notes due Sept. 14, 2014, for the intermediate holding company, Tower
Group, Inc. Additionally, A.M. Best has downgraded the ICR to “c”
from “cc” of the ultimate parent, Tower Group International, Ltd.
(TWGP) (Bermuda) [NASDAQ:TWGP]. All ratings are under review with
developing implications. All companies are headquartered in New York,
NY, unless otherwise specified. (See below for detailed listing of the
companies and ratings.)
The rating actions take into consideration TWGP’s most recent Securities
and Exchange Commission 10Q filing, which included a net loss of $106
million and GAAP shareholders’ equity (excluding noncontrolling
interests) of negative $11 million. In addition, these rating downgrades
reflect the heightened uncertainty around TWGP’s ability to repay its
senior debt holders in the event its pending merger with ACP Re Ltd.
(ACP Re) (Bermuda) does not occur on or before Sept. 15, 2014. These
actions also consider the additional ratings drag placed on all of
TWGP’s operating entities in terms of their ability to pay claims. In
addition, A.M. Best remains concerned with the continued delays in TWGP
reporting its quarterly SEC filings, as well as its ability to operate
as a going concern.
The ratings will remain under review pending the planned merger with ACP
Re, which is anticipated to close in September 2014, but may be delayed
to as late as Nov. 15, 2014, which is the merger termination date. The
under review with developing implications status on all the ratings
acknowledges the potential benefits to be garnered from the transaction,
but also the potential downside from any additional adverse reserve
development or any unforeseen event that might occur up until the close
of the transaction. The ratings could be downgraded further if certain
events or unforeseen circumstances cause the merger to fall through. Any
default on the payment of principal and/or interest to existing debt
holders would result in an immediate downgrade.
The FSR of C++ (Marginal) has been downgraded to C (Weak) and the ICRs
have been downgraded to “ccc” from “b” for the following pooled and
reinsured members of Tower US Pool:
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Company
Kenneth Monahan, 908-439-2200, ext. 5342
Ryan, 908-439-2200, ext. 5325
Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
Peavy, 908-439-2200, ext. 5644
Assistant Vice President,
Source: A.M. Best Company