Best Places Ratings for MEEMIC Insurance Co. Under Review with Negative Implications

A.M. Best Co. has placed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of “a-“of MEEMIC Insurance Company (MEEMIC) (Auburn Hills, Michigan) under review with negative implications.

These rating actions follow ProAssurance Corporation’s (ProAssurance) announcement that it entered into a definitive agreement to sell MEEMIC to Motors Insurance Corporation, a member of GMAC Insurance Group (GMACI). The transaction is subject to regulatory approval and is expected to be completed in the first quarter of 2006. The FSRs and ICRs of ProAssurance’s professional liability subsidiaries as well as the rating of ProAssurance’s senior unsecured convertible debentures are unchanged by this transaction.

The under review status with negative implications mirrors that of GMACI. The FSR of A- (Excellent) and ICR of “a-“of GMACI are currently under review with negative implications reflecting the financial pressures that exist at GMACI’s ultimate parent, General Motors Corporation.

Over the years, ProAssurance Group has benefited from the diversified earnings source derived through MEEMIC’s personal lines business, which accounts for nearly one-third of ProAssurance’s consolidated earnings.

However, ProAssurance believes that scale within the personal lines business is needed to succeed in this increasingly competitive marketplace. A.M. Best expects that the proceeds of the transaction will be deployed to its core professional liability business.

Prospectively, ProAssurance should continue to benefit from the strong operating performance associated with this business and its business position as a leading writer of these coverages in the United States.