A.M. Best Places Ratings of Certain Subsidiaries of OneBeacon Insurance Group Under Review with Negative Implications [Professional Services Close – Up]

A.M. Best Co. has placed under review with negative implications the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a" of certain indirect subsidiaries of OneBeacon Insurance Group (Bermuda).

In a release on October 19, the Company noted that additionally, A.M. Best has placed under review with negative implications the FSR of B++ (Good) and ICR of "bbb+" of Potomac Insurance Company (Philadelphia, PA). OneBeacon Group's remaining ratings are unchanged.

The rating actions follow disclosure of a definitive agreement under which Armour Group Holdings Limited will acquire all outstanding shares of certain legal entities from OneBeacon Insurance Group. When transferred, the legal entities will contain the assets, liabilities (including gross and ceded loss reserves) and capital to support the continued run off of their liabilities, as well as certain infrastructure elements, including staff and office space. The ratings will remain under review until the close of the transaction and the completion of A.M. Best's analysis of its impact on the companies' ratings. The transaction is expected to close during the second half of 2013, pending regulatory approval.

The FSR of A (Excellent) and ICRs of "a" have been placed under review with negative implications for the following indirect subsidiaries of OneBeacon Insurance Group:

-The Camden Fire Insurance Association

-The Employers' Fire Insurance Company

-The Northern Assurance Company of America

-OneBeacon America Insurance Company

-OneBeacon Insurance Company

-OneBeacon Midwest Insurance Company

-Traders & General Insurance Company

The FSR of A (Excellent) and ICRs of "a" are unchanged for the following indirect subsidiaries of OneBeacon Insurance Group:

-Atlantic Specialty Insurance Company

-Homeland Insurance Company of New York

-Homeland Insurance Company of Delaware

-OBI National Insurance Company

The following debt rating is unchanged:

OneBeacon U.S. Holdings, Inc.-

-- "bbb" on $270 million 5.875 percent senior unsecured notes, due 2013

The following indicative ratings under the shelf registration are unchanged:

OneBeacon U.S. Holdings, Inc. and OneBeacon Insurance Group-

-- "bbb" on senior unsecured debt

-- "bbb-" on subordinate debt

-- "bb+" on preferred stock

OneBeacon U.S. Holdings Trust I, II, III-

-- "bb+" on preferred stock

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides an explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Catastrophe Analysis in A.M. Best Ratings"; "Understanding BCAR for Property/Casualty Insurers"; "Rating Members of Insurance Groups"; "Insurance Holding Company and Debt Ratings"; and "The Treatment of Terrorism Risk in the Rating Evaluation."

A.M. Best Company is an insurance rating and information source.

More information:

www.ambest.com/ratings/methodology

www.ambest.com

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