AM Best Comments on Michigan Professional Insurance Exchange Credit Ratings Following Acquisition Announcement

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OLDWICK, NJ–(BUSINESS WIRE)–AM Best commented that the financial strength rating (FSR) of A- (Excellent) and the long-term issuer credit rating (long-term ICR) of “a-” (Excellent) from the Michigan Professional Insurance Exchange (MPIE) remain unchanged following the recent announcement of its impending acquisition by MMIC Insurance, Inc. (MMIC) and its parent company, Constellation, Inc. (Constellation). The transaction, subject to customary closing conditions and regulatory approvals, is expected to close in the third quarter of 2022. MPIE is domiciled in Michigan.

On March 25, 2022, MMIC announced that it had entered into a definitive agreement pursuant to which MPIE will transfer its loss reserves through a loss portfolio transfer agreement (LPT) and enter into a quota and rights sharing agreement. renewal with MMIC for future MPIE activities.

Under the LPT, MPIE will cede 100% of its provisions for claims and settlement expenses to MMIC. Alongside the LPT, MPIE will sign a 100% quota sharing and renewal rights agreement with MMIC. MPIE will pay MMIC 100% of the premium and MMIC will assume 100% of outstanding losses and claims adjustment expenses and 100% of existing unearned premium reserves. Both parties will sign an asset purchase agreement. Constellation Solution, Inc., a subsidiary of Constellation, will purchase the assets of MPIE and the interests of its subsidiaries, PRCD Inc. and MPIE Consulting dba ERC Risk Solutions, LLC.

It is expected that at the conclusion of the various agreements and transfers of activity, the ratings of MPIE will change to an unrated status given the effective cessation of its activities within the current legal entity. Throughout the transaction period, minimal operational or financial changes are anticipated. As usual, AM Best will continue to monitor MPIE’s risk-adjusted capitalization, operating performance, business profile and enterprise risk management.

This press release relates to credit ratings that have been published on AM Best’s website. For all rating information relating to the release and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit AM Best’s Recent Rating Activity webpage. For more information on the use and limitations of credit rating opinions, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best’s Credit Scores, Best’s Preliminary Credit Scores, and AM Best’s press releases, please see Guide to the Proper Use of Best Scores and Ratings.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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