Republic Companies (NASDAQ:RUTX)
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A.M. Best Co. has placed the financial strength rating
of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Republic
Companies Group (Republic) (Dallas, TX) and its property/casualty
insurance operating companies under review with developing
implications. A.M. Best has also placed the ICR of "bbb-" for
Republic's parent, Republic Companies Group, Inc. (NASDAQ: RUTX)
(Dallas, TX), under review with developing implications. (See below
for a detailed list of the ratings.)
These rating actions follow the announcement that Republic's
parent has entered into a definitive merger agreement with a
subsidiary of Delek Capital Ltd. (Delek Capital). Delek Capital is a
subsidiary of Delek Group Ltd., a conglomerate domiciled and
publicly-traded in Israel with interests in energy, infrastructure,
communications, real estate, financial services, insurance and
automotive businesses.
A.M. Best anticipates minimal near-term impact operationally to
Republic as existing senior management will continue in their current
capacity. However, additional due diligence regarding the long-term
strategic implications of this transaction, potential growth
initiatives, the impact on Republic's statutory capital and the
ultimate capital structure of its new intermediate parent is required.
A.M. Best plans to meet with Republic's and Delek Capital's
management in the near term and will conduct additional due diligence
regarding this transaction. The ratings will remain under review
pending the close of the transaction, which is expected in fourth
quarter 2006 pending regulatory and shareholder approvals, as well as
A.M. Best's meeting with management.
The FSR of A- (Excellent) and ICRs of "a-" have been placed under
review with developing implications for the Republic Companies Group
and its following property/casualty affiliates:
-- Republic Fire & Casualty Insurance Company
-- Republic Lloyds
-- Republic Underwriters Insurance Company
-- Republic-Vanguard Insurance Company
-- Southern County Mutual Insurance Company
-- Southern Insurance Company
-- Southern Underwriters Insurance Company
-- Southern Vanguard Insurance Company
The ICR of "bbb-" has been placed under review with developing
implications for Republic Companies Group, Inc.
For Best's Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.
For current Best's Ratings, independent data and analysis on more
than 3,000 individual property/casualty companies and A.M. Best
groups, please visit www.ambest.com/pc.
A.M. Best Co., established in 1899, is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit A.M. Best's Web site at www.ambest.com.