OLDWICK, N.J.--(BUSINESS WIRE)--June 20, 2006--
A.M. Best Co. has upgraded the financial strength rating
(FSR) to A- (Excellent) from B++ (Very Good) and assigned issuer
credit ratings (ICR) of "a-" to Eastern Alliance Insurance Group
(EAIG). The ratings reflect the combined results of Eastern Alliance
Insurance Company (EAIC) and Allied Eastern Indemnity Company (AEIC),
which operate under an intercompany pooling agreement. Concurrently,
A.M. Best has assigned an ICR of "bbb-" to Eastern Insurance Holdings,
Inc. (EHI) (NASDAQ:EIHI), a newly formed holding company. The outlook
for all ratings is stable.
The ratings recognize EAIG's excellent capitalization, improved
underwriting profitability and diversified organizational structure
providing multiple revenue streams. Partially offsetting these
positive factors is adverse loss reserve development that occurred in
earlier accident years, as well as the group's geographic and product
concentration, which potentially exposes it to increased risk of
regulatory or legislative changes. Despite these concerns, the rating
outlook is supported by the focused underwriting and increased
conservatism in the reserve base, which in turn have improved overall
capitalization.
Eastern Holding Company Ltd. (EHC) and Educators Mutual Life
Insurance Company (Educators Mutual) have entered into a definitive
agreement with the adoption by Educators Mutual of a related plan of
mutual to stock conversion. Under the agreement and the plan,
Educators Mutual converted from mutual to stock form and became a
wholly-owned subsidiary of the newly formed holding company, EHI. Upon
closing, EHI exchanged cash and common stock for the outstanding
shares of stock of EHC. Completion of the conversion was conditioned
upon the simultaneous acquisition of EHC and its subsidiaries by EIHI.
EHC had $1.75 million outstanding on a line of credit, which is
intended to be paid in full utilizing the proceeds of the offering.
Additionally, EHC maintains trust preferred securities, which are
redeemable at par on May 15, 2008. The company plans to retire the
trust preferred securities on that date.
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information, visit A.M. Best's Web site at www.ambest.com.
Source: A.M. Best Co.