Tower U.S. Pool Placed Under Review

August 13, 2013

On Monday, A.M. Best Co. placed the “A-minus” financial strength rating of pooled and reinsured members of the Tower US Pool (Tower) under review with negative implications.

The Oldwick, N.J.-based rating agency took the same action with respect to issuer credit ratings (ICR) of “a-minus.”

A.M. Best also has placed under review with negative implications the FSR of “A-minus” and ICR of “a-minus” of CastlePoint Reinsurance Company, Ltd. (Bermuda).

All companies are owned by Tower Group International, Ltd. Best said the under review status reflects Tower’s previously issued press release, which announced the postponement of its financial results for second-quarter of 2013, and an anticipated prior-year loss reserve charge in the range of $60 million to $110 million pre-tax.

In the rating announcement, however, Best said that “even at the high end of the reserve charge, risk-adjusted capitalization is expected to remain supportive of the ratings.”

The ratings will remain under review pending further discussions between A.M. Best and Tower’s management.

The negative implications reflect the reasonable likelihood that the ratings could be downgraded or the outlook revised, Best said.

Best listed the following pooled and reinsured members of Tower US Pool that are subject to the under review status:

CastlePoint Insurance Company

CastlePoint National Insurance Company

Tower Insurance Company of New York

Tower National Insurance Company

Preserver Insurance Company

North East Insurance Company

Hermitage Insurance Company

CastlePoint Florida Insurance Company

Kodiak Insurance Company

York Insurance Company of Maine

Massachusetts Homeland Insurance Company

Concurrently, A.M. Best has placed under review with negative implications the ICR of “bbb-” as well as the debt rating of “bbb-” on $142.5 million 5.00 percent senior convertible notes, due 2014 of the intermediate holding company, Tower Group, Inc.

Source: A.M. Best Company, Inc.

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