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A.M. Best Takes Various Rating Actions on ACP Re Ltd. and Subsidiaries Following Close of Tower Group International, Ltd. MergerOLDWICK, N.J. --(Business Wire)-- A.M. Best has upgraded the financial strength rating (FSR) to B- (Fair) from C (Weak) and the issuer credit ratings (ICR) to "bb-" from "ccc" of the former members of the Tower US Pool (Tower) and CastlePoint Reinsurance Company, Limited (Castlepoint) (Bermuda). In addition, A.M. Best has revised the implications on the under review status for these ratings to positive from developing. All companies are headquartered in New York, NY, unless otherwise specified. (See below for a detailed listing of the companies and ratings.) Additionally, A.M. Best has withdrawn the ICR of "c" of the intermediate holding company, Tower Group, Inc., and the debt rating of "c" on the $150 million 5.00% senior unsecured convertible notes due in 2014, reflective of the retirement of the notes. Furthermore, A.M. Best has withdrawn the ICR of "c' of the ultimate holding company, Tower Group International, Ltd. These rating actions follow the announcement that on Sept. 15, 2014, ACP Re Ltd. (ACP Re) (Bermuda) completed its acquisition of Tower. As a result of the merger, each share of Tower common stock (other than shares owned by ACP Re, Tower or any subsidiary of either ACP Re or Tower, as well as dissenting shares as to which appraisal rights were properly exercised) was converted into the right to receive $2.50 in cash, without interest, and Tower's common shares will no longer be publicly traded. The rating actions on Tower and Castlepoint reflet in part the reduced financial strain due to the retiring of Tower Group, Inc.'s senior convertible notes as part of the merger agreement and the implicit and explicit support provided by ACP Re to these entities at the close. These ratings will remain under review with positive implications pending further progress made on the implementation of planned intercompany reinsurance contracts between the former Tower US Pool members and ACP Re, and the potential for further explicit support. Concurrently, the FSR of A- (Excellent) and ICR of "a-" of ACP Re remains under review with negative implications as A.M. Best continues to assess the financial impact on ACP Re, including an evaluation of Tower's legacy loss reserve position acquired as part of the transaction. These reserves are currently held in Castlepoint, which assumed all loss reserves held by the former Tower US Pool members through a loss portfolio transfer. The FSR has been upgraded to B- (Fair) from C (Weak), the ICRs have been upgraded to "bb-" from "ccc" and the implications on the under review status have been revised to positive from developing for the following pooled and reinsured members of the former Tower US Pool:
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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