Merchants Insurance of N.H. rating downgraded
Fitch Ratings has lowered the insurer financial strength rating of Merchants Insurance Company of New Hampshire from “BB+” to “BBB-” after the acquisition of the insurer’s parent corporation by American European Group.
In a release, Fitch officials said AEG’s operating performance and competitive profile is “weaker” than Merchants Insurance Company of New Hampshire’s “standalone profile.”
Despite the lowered rating, the outlook for Merchants Insurance Company of New Hampshire, known as MNH, remains stable.
On March 30, AEG purchased Merchants Group Inc. — MNH’s parent company — for $70.8 million, or about $33 per share. MNH will be renamed American European Insurance Company.
According to Fitch, in late December 2006, Merchants Group and AEG entered into a renewal rights transaction with Merchants Mutual Insurance Company, another subsidiary, for substantially all of MNH’s existing directly written policies for approximately $3.4 million, with a noncompete agreement in which certain classes of business cannot be targeted for up to two years.
Merchants Mutual then formed a new subsidiary, Merchants Preferred Insurance Company, with the intention of renewing all of MNH’s business.
Fitch maintained its “A-” of Merchants Mutual. The ratings firm views Merchants Preferred as a core operation to Merchants Mutual and assigned it an “A-” rating. Both have been given stable outlooks.
As of year-end 2006, MNH reported assets of $196 million and a combined ratio of 97.6 percent.
Merchants Group, through its New Hampshire company, offers property and casualty insurance through independent agents to preferred risk individuals and businesses. – CINDY KIBBE