Specialty insurer, Weston Insurance Holdings Corporation, is set to acquire Anchor Specialty Insurance Company, a subsidiary of Anchor Property & Casualty Insurance Company.
In light of the impending acquisition, financial analysis firm Demotech has announced that the Financial Stability Rating (FSR) of A, Exceptional, assigned to Anchor Specialty is being sustained.
Demotech’s President and co-founder, Joseph Petrelli, has provided some insight into why the firm’s FSR is being sustained.
“We have been frequently briefed by Anchor and Weston personnel throughout Weston’s due diligence and assured that both parties desire to effect a transaction that will enhance the 2019 year-end annual statement of Anchor Specialty Insurance Company.
“It appears that consumer, claimant, agency, and reinsurer relationships should be enhanced by the introduction of Weston’s ownership, management, expertise, philosophy, and financial resources.”
At the same time, Demotech has revised the FSR assigned to Anchor Property & Casualty Insurance Company from A, Exceptional, to M, Moderate. Demotech explains that this revision is based upon significant changes to the firm’s business model, which includes that in the near future, the company will cease writing new business and sell-off the unexpired period of its current policies in force.
The firm will also coordinate with the State of Florida Office of Insurance Regulation the orderly run-off of its remaining liabilities.
Petrelli commented: “We have been briefed by Anchor personnel regarding the revisions to its business model. Although our review and analysis process was designed to evaluate carriers executing a business model that is forward focused, Anchor’s commitment to a ‘soft landing’ for existing policyholders and claimants convinced us to continue to review, analyze, and comment on its balance sheet integrity and operating results during its anticipated voluntary runoff.”
It was revealed yesterday that a subsidiary of HCI Group, Homeowners Choice Property & Casualty Insurance Company, is to acquire the policies of Anchor Property & Casualty Insurance Company.
The company’s decision to sell its policies may have been motivated by the broadly difficult environment prevailing in the state.
The revision of Anchor’s FSR comes after Demotech warned recently that it is anticipating downgrades for several insurance carriers in Florida, driven by a number of state-specific pressures on financial performance.
At this time, analysts noted that some carriers in the region will likely seek a sale to avoid being downgraded, while others might well ask for permission to voluntarily run-off outstanding claims.