Moody's Issues Crump Company Rating

The holding company for the Crump wholesale insurance brokerage does not merit an "A" financial rating until it proves it can successfully put the parts of its prospective merger together, a rating agency said.

New York-based Moody's issued a "B2" rating to J.C. Flowers & Co., L.L.C., the private-equity holding company of Dallas-based Crump, earlier this week mentioning the firm's plans to acquire the wholesale brokerage business of Roseland, N.J.-based BISYS Group.

The speculative grade rating reflects Crump's strength as a wholesale broker, but Moody's explained that strength is tempered by the lack of history as a consolidated enterprise with BISYS.

An upgrade, said Moody's, would depend on how well Crump is able to integrate BISYS' property-casualty business with Crump and develop management to oversee the rest. The rating could also see an upgrade if the credit and cash metrics improve.

Besides the p-c business, BISYS will also bring life insurance and retirement brokerage operations to Crump. Currently, Crump is a p-c wholesale broker.

According to a Moody's analyst, the rating, while low on the scale by the rating agency's standard, is typical for this type of business because there is a lot of debt involved in the deal. However, it is typical of a number of other insurance brokerage firms that have gone private using debt.

BISYS announced today that it is paying a special one-time dividend of 15 cents per share on common stock to be paid after the merger. The closing is scheduled for Aug. 1, and the payment will be made on that day. The payment day will be rescheduled if the closing does not take place on that date.

BISYS said in addition to the 15 cent dividend, shareholders will receive $11.85 per share for their stock after the deal is concluded.

The deal is reportedly worth $1.47 billion.