Standard & Poor's Ratings Services said it placed its "single-A" financial strength ratings on Praetorian Insurance Co. on Credit Watch with positive implications.
The action followed the announcement that Hannover Re is selling the Praetorian companies to the QBE Insurance Corp.
The purchase price is $800 million.
Following its purchase, QBE intends to cancel the 50 percent quota share reinsurance arrangements that Praetorian has with Hannover Re, and inject an additional $200 million of capital into Praetorian to maintain its capital adequacy.
"The rating action reflects our expectation that Praetorian will be viewed as a good strategic fit with QBE's existing specialist insurance program business," said Siddhartha Ghosh, S&P's credit analyst. "If the company is determined to be strategically important to QBE, we expect to affirm the ratings on Praetorian. If QBE provides the necessary explicit support to view Praetorian as a core operation, Standard & Poor's might raise the ratings one notch to 'A-plus.'"
He added, "We expect to resolve this Credit Watch following the expected completion of the sale in the second quarter of 2007."
All ratings affected by this rating action can be found on S&P's public Web site at www.standardandpoors.com; under "Credit Ratings" in the left navigation bar, select "Find a Rating," then "Credit Ratings Search."
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