Best Sees No Change in National Interstate’s Ratings on Vanliner Acquisition

May 4, 2010

A.M. Best Co. commented that the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit rating (ICR) of “a+” of National Interstate Group and its members and the ICR of “bbb+” of the group’s publicly traded parent, National Interstate Corporation are unchanged.

The decision follows the announcement that National Interstate Insurance Company (NIIC), has entered into a definitive agreement to acquire Vanliner Group, Inc., and its wholly-owned P/C subsidiary, Vanliner Insurance Company from UniGroup, Inc. [See IJ web site –].

The outlook for the ratings is stable. The transaction is expected to close by the end of second quarter 2010 pending customary closing conditions and regulatory approvals.

Best noted that under the terms of the agreement National Interstate “will pay approximately $125 – $135 million in cash, which represents Vanliner’s tangible book value at closing. As part of the definitive agreement, UniGroup, Inc. has agreed to provide National Interstate with comprehensive financial guarantees related to the run-off of Vanliner’s balance sheet following the close, whereby guaranteeing both favorable and unfavorable balance sheet development inures to UniGroup, Inc.”

Best also indicated that “Vanliner is primarily a provider of insurance solutions to the moving and storage industry, which compliments National Interstate’s niche orientation and focus on the transportation industry. Subsequent to the planned acquisition, Vanliner is expected to be reinsured by NIIC and become a member of the group. The group maintains more than adequate risk-adjusted capital for its current ratings to fund the proposed transaction and the group is expected to maintain solid risk-adjusted capitalization post closing.”

Best summarized the ratings concerned as follows:
The FSR of A (Excellent) and ICRs of “a+” are unchanged for National Interstate Group and its following members:
— National Interstate Insurance Company
— National Interstate Insurance Company of Hawaii, Inc.
— Triumphe Casualty Company

Source: A.M. Best

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