News

AM Best has downgraded the financial strength rating (FSR) to C++(Marginal)  from B  (Fair) for Tower Group International and subsidiaries.  The announcement dated May 9th, 2014 indicates the ratings remain under review with developing implications.  For more details, see the AM Best press release.

This most recent action follows previous downgrade action by AM Best October 8, 2013 and again on December 20, 2013.  Best states “The rating actions take into consideration TWGP’s most recent Securities and Exchange Commission 10K filing, which included an additional $63 million of prior year reserve development, further reductions in GAAP shareholders’ equity as well as ongoing declines in statutory policyholders surplus and risk-adjusted capitalization…”

In our Bulletin posted January 7, 2014 we advised you of the pending merger of Tower with ACP Re and the financial partnership with AmTrust and National General (affiliated companies with ACP Re) Click to find additional information on the pending merger.

Part of the merger plan included the issuing of cut through endorsements on parts of Tower’s existing book.  The process of issuing these cut through endorsements is nearing completion.  Policies with a cut through endorsement will be 100% quota share reinsured through ACP RE.   Policies not eligible for the cut through endorsement will be non-renewed by Tower.  Your Tuscano underwriter will be contacting you with any affected policies.

You may want to consider what ramifications, if any the C++ rating has on E&O coverage, as well as the need to re-market or move coverage mid-term.  Tuscano will be happy to assist you with any re-marketing efforts.

Should you have questions or wish to discuss this matter further, please do not hesitate to contact me.