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.
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