A.M. Best Places Ratings of Ceres Group, Inc. and Its Subsidiaries under Review with Positive Implications
May 02 2006 - 3:05PM
Business Wire
A.M. Best Co. has placed the financial strength rating of B+ (Very
Good) and the issuer credit ratings (ICR) of "bbb-" of Ceres Group
Inc.'s (Ceres) (Cleveland, OH) (NASDAQ: CERG) primary life/health
subsidiaries, Continental General Insurance Company (Omaha, NE) and
Central Reserve Life Insurance Company (Cleveland, OH) under review
with positive implications. A.M. Best has also placed the ICR of
"bb-" of Ceres under review with positive implications. These
rating actions follow Great American Financial Resources, Inc.'s
(GAFRI) (Cincinnati, OH) (NYSE: GFR) announcement that it has
signed a definitive merger agreement to acquire all of the
outstanding shares of Ceres for approximately $205 million in cash.
GAFRI's ratings are unchanged by these actions. Ceres markets an
array of health and life insurance products through two primary
business segments, senior and medical. The senior segment includes
Medicare supplement, life, long-term care and annuities, while the
medical segment includes major medical health insurance for
individuals, families, associations and small to mid-size
businesses. The proposed acquisition will nearly double GAFRI's
book of senior premium income and provides distribution
opportunities across all product lines. In addition, the
transaction expands its presence in the Medicare supplement market,
propelling GAFRI to a top-ten ranking based on Medicare supplement
premiums. A.M. Best views the transaction as an effective way for
GAFRI to utilize excess capital from the recently announced sale of
Chatham Bars Inn and the actual sale of its subsidiary in Puerto
Rico. GAFRI's gross investment in Ceres will be partially offset
through reinsurance arrangements with Hannover Life Re. In
addition, Ceres' medical segment is not consistent with GAFRI's
core operations, and A.M. Best expects GAFRI to address this in the
near term. The transaction is expected to close by the end of 2006,
pending regulatory approval. For Best's Ratings, an overview of the
rating process and rating methodologies, please visit
www.ambest.com/ratings. For current Best's Ratings, independent
data and analysis on more than 1,100 individual life/health
companies and A.M. Best groups, please visit www.ambest.com/lh.
A.M. Best Co., established in 1899, is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit A.M. Best's Web site at www.ambest.com.
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