Charlotte, N.C.-based Bank of America Corp. is acquiring theBalboa Insurance Group as part of the deal announced today toacquire Countrywide Financial Corp., Calabasas, Calif., in a $4billion stock transaction.

Balboa's financial strength rating, because of problems with itsparent company, has been under review since last August by A.M.Best Co. The rating agency said in the wake of the acquisition thestatus was now “under review with developing implications.”

Countrywide, a residential mortgage lender, as a result ofweakness in the subprime mortgage and real estate markets, hasreported $282 million in net losses for the first three quarters of2007 on $4.9 billion in revenue, down from $2.1 billion in netincome on $8.7 billion in revenue for the comparable period in2006.

But Bank of America said it will be getting an organization thatstill managed to originate $408 billion in mortgage loans in 2007in spite of the turmoil.

The deal has been approved by the boards of Bank of America andCountrywide, and it now is subject to approval by regulators and byCountrywide shareholders.

Countrywide's insurance segment, based in Irvine, Calif., sellsinsurance and reinsurance. Balboa, has three property-casualtyinsurance operating units–Balboa Insurance Company, MeritplanInsurance Company and Newport Insurance Company and Plano,Texas-based Newport E&S.

The companies write insurance products that protect thecollateral on loans–also known as collateral protection insurance.They work with financial institutions offering lender-placedautomobile and property coverage, and place coverage throughgeneral agents and independent retailers as well.

Balboa Group ranked as the 15th most profitableproperty-casualty insurance group on National Underwriter's thirdannual Profit Leaders rankings last year, qualifying for the spotwith a 12-year average combined ratio of 95. The listings are basedon average combined ratios for the years 1995-2006 were calculatedfrom NAIC data compiled by Highline Data, a data affiliate ofNU.

According to NU's more recently published rankings based onpremium size, Balboa Group ranked as the 65th largest group with$965.8 million in net premiums written in 2006.

The firm's Balboa Life and Casualty Group, the retail insuranceunit, sells term life, credit life, and credit disability insuranceas well as voluntary homeowners and automobile insurance andlender-placed property and automobile insurance.

Balboa Life also has a commercial insurance unit that sellsemployee benefits products along with property-casualty insuranceto home builders, mortgage broker, bankers, real estate brokers andcommercial property owners, the company says.

Another unit in the Countrywide insurance segment, BalboaReinsurance Company, sells mortgage reinsurance.

The insurance operations at Countrywide generated $1.1 billionin net premiums during the first three quarters of 2007, up from$865 million in net premiums during the comparable period in 2006,according to Countrywide's 2006 third quarter filing with the U.S.Securities and Exchange Commission.

The insurance segment is reporting $429 million in pretaxearnings for the first three quarters of 2007 on $1.2 billion inrevenue, up from $245 million in pretax earnings on $942 million inrevenue for the comparable period in 2006.

The Countrywide insurance segment employed about 2,280 peopleduring the third quarter.