A.M. Best Co. has placed under review with positive implications the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of Optima Insurance Company (Optima) (San Juan, PR), following the recent announcement that a subsidiary of QBE Insurance Group Limited (QBE) (Sydney, Australia) has agreed to acquire Optima Insurance Group, Inc., the parent company of Optima.
The under review with positive implications status reflects confirmation of an executed stock purchase agreement between the parties, and that 100% of the stock of Puerto Rico-based Optima Insurance Group, Inc. and its wholly owned subsidiary, Optima, will be acquired by QBE through QBE Latin America Insurance Holdings, S.L. QBE also acquired an affiliated agency, Colonial Insurance Agency, through which Optima derives approximately 85% of its written premium. Additionally, QBE purchased New Century Finance Corp, a premium finance agency. Neither of these entities is owned by Optima Insurance Group, Inc., however; they are owned by common stockholders of Optima.
While the agreement remains subject to regulatory approval, both parties anticipate the transaction to close during the first quarter of 2012.
The ratings will remain under review with positive implications pending regulatory approval, the completion of a planned intercompany quota share agreement provided by the QBE organization and additional discussions with the new ownership to determine Optima’s strategic fit within QBE, a much larger, more diversified organization.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology — Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “A.M. Best’s Ratings & The Treatment of Debt”; “Equity Credit for Hybrid Securities”; and “Natural Catastrophe Stress Test Methodology.” Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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