Specialty insurer Sirius America was put on ratings watch by A.M. Best Co. yesterday after its parent company, White Mountain, announced it will be sold to an investor’s group for $139 million.
White Mountains Re Group, Ltd., a wholly-owned subsidiary of Hamilton, Bermuda-based White Mountains Insurance Group, Ltd., said it agreed to sell its Sirius America subsidiary to an investor group led by Lightyear Capital. As part of the transaction, White Mountains said it would acquire an equity interest of approximately 18 percent in Lightyear.
The carrier said it acquired Sirius America in 2004 as part of its acquisition of the Sirius group. Sirius America is a Delaware-domiciled primary underwriter of program specialty insurance.
The transaction, which is subject to regulatory and other conditions, is expected to close this summer, the company said.
In a filing with the Securities & Exchange Commission, White Mountain said it sold Sirius America to Lightyear for approximately $139 million. The book value for Sirius America is approximately $116 million, the company added.
Oldwick, N.J.-based rating agency Best said Sirius America’s financial strength rating of “A” (Excellent) and the issuer credit rating of “a” were placed under review with negative implications following the announcement.
Best said it expects Sirius America’s financial strength rating to be downgraded to “A-minus” (Excellent) and the credit rating to drop to “a-minus” after the close of the transaction.
The rating, Best added, had no implications for White Mountain’s rating.