AM Best places United National Specialty FSA under review

AM Best has placed under review with developing implications the financial strength rating (FSR) of A (Excellent) of United National Specialty Insurance Company (United National Specialty).

The rating actions reflect the recent announcement by State National Companies (State National) of its intent to acquire United National Specialty as a shell company from United National Specialty’s immediate parent, Diamond State Insurance Company (Diamond State), according to AM Best.

United National Specialty will continue to benefit from the various reinsurance arrangements with its current parent and affiliates, although it is anticipated that the current 4 percent pooling arrangement will drop to 0 percent prior to the expected close of the transaction on or before Sept 30 2016.

According to AM Best, this change in the pooling arrangement reflects the intention of Global Indemnity, the ultimate parent, to fully reinsure all business currently on the books of United National Specialty and any business remaining on the books at the time of the close of the transaction.

The insurance operating companies of State National currently have an FSR of A (Excellent). The outlook for each rating is stable, according to the rating firm.

The sale of the company is pending regulatory approvals, and the ratings will remain under review until AM Best has met with State National’s management and the transaction has closed.