OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has placed under review with positive implications the financial strength rating of A- (Excellent) and the issuer credit ratings of “a-” of CorePointe Insurance Company (CIC) (Birmingham, MI).
The under review status reflects CorePointe Group’s announcement that it has entered into a definitive agreement for the sale of CIC to AmTrust Financial Services, Inc. [NASDAQ:AFSI]. The close of the sale is subject to regulatory approval.
CIC is engaged in the offering of insurance products primarily to automobile and motorcycle dealerships, including physical damage inventory protection, commercial package, auto liability and property coverage. Prior to April 2011, CIC operated as Chrysler Insurance Company, a subsidiary of Chrysler Financial. AmTrust is a multinational insurance holding company with expertise in property and insurance products including workers’ compensation, commercial automobile, general liability and extended service and warranty coverage through its primary insurance subsidiaries.
AmTrust views the proposed acquisition of CIC as a means of continuing the commitment to grow its insurance platform. Additionally, AmTrust views CIC as a 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 products and distribution.
The positive implications reflect the expected benefits ClC will receive from being part of a larger organization, specifically from improved expense ratios. While there are some execution risks involved in integrating CIC into the AmTrust organization, the company will be a member of a larger, strongly capitalized and higher-rated organization and should realize some economies of scale.
The ratings of CIC will remain under review with positive implications pending the completion of the acquisition of CIC by AmTrust. During this time, positive and negative rating actions are unlikely. However, the inability of CIC to successfully complete the integration and/or deterioration in underwriting results may put pressure on CIC's ratings as a stand-alone rated entity.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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.
Key insurance criteria reports utilized:
- Alternative Risk Transfer (ART)
- Catastrophe Analysis in A.M. Best Ratings
- Evaluating Non-Insurance Ultimate Parents
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
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