OLDWICK, New Jersey, September 16, 2021– (COMMERCIAL THREAD) –AM Best downgraded the financial strength rating to B + (good) from A- (excellent) and the long-term credit ratings of issuers (long-term ICR) to “bbb-” (good) from “a-” (excellent) of the Public Service Employees Insurance Company and CSE Safeguard Insurance, which constitute the CSE Insurance Group (CSE Group) domiciled in Walnut Creek, California. These credit ratings (ratings) have been subject to review with developing implications.
The ratings reflect the strength of the CSE group’s balance sheet, which AM Best considers very strong, as well as its marginal operational performance, limited business profile and marginal management of business risks.
The rating downgrades reflect the elimination of the rating improvement following the announcement that the ultimate parent company of the CSE Group, Société de Groupe d’Assurance Mutuelle Covéa (Covea), has entered into a definitive agreement to sell the Group CSE to Porch Group, Inc. (Porch), a Seattle-based publicly traded software and insurance vertical company. The sale is expected to close in the second quarter of 2022 and is subject to customary regulatory approvals.
Prior to the announcement, the ratings of the CSE group were historically improved by Covea, as the CSE group was considered to be of strategic importance to the organization. The CSE Group’s credit enhancement also took into account the benefits of being part of a much larger organization, and the explicit financial support provided by Covea over the years (via reinsurance and capital contributions) and the notion implicit financial support when needed.
In order to sell CSE Group to Porch, the credit enhancement received from Covea has been discontinued, as CSE Group is no longer considered a strategic member of the Covea organization. This also takes into account the reinsurance agreements that are no longer in place between Covea and CSE Group, which were terminated before the announced sale, and the removal of all explicit support in various forms.
The state of development implications reflects AM Best’s need to further assess the strategic plans of the new parent company following further discussions with the company. Ratings will remain under review until all approvals are finalized, the transaction closes and AM Best assesses the overall impact.
This press release relates to credit ratings published on the AM Best website. For all rating information relating to the publication and relevant disclosures, including details of the office responsible for the publication of each of the individual ratings referenced in this publication, please see AM Best’s Recent rating activity Web page. For more information on the use and limits of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s credit scores, Best’s preliminary credit reports, and AM Best’s press releases, please see Guide to Proper Use of Best Ratings and Reviews.
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