A.M. Best Places Jupiter Holdings Insurance Units Under Review On Announcement of Sale

A.M. Best Places Jupiter Holdings Insurance Units Under Review On Announcement of Sale

OLDWICK, N.J.–(BUSINESS WIRE)–Aug. 31, 1998–A.M. Best Co. today placed the insurance subsidiaries of Jupiter Holdings Inc., a wholly owned subsidiary of The Northland Co., under review with developing implications following the announcement by Northland that it has agreed to sell its insurance affiliates to Associates First Capital Corp.

The non-insurance operations of Northland will be divested before the acquisition closes.

The transaction will expand Associates’ insurance operations and diversify its insurance distribution network. In addition, it will provide potential cost savings, as well as cross-selling opportunities for Jupiter Holdings through Associates’ captive financing distribution system. Jupiter has exhibited a record of profitable growth in recent years as evidenced by a competitive five-year combined ratio of 98.3. The acquisition is subject to regulatory approval and approval by Northland’s shareholders.

The ratings will remain under review pending further discussions with management regarding the long-term operational impact of the transaction, as well as management’s plans to realize synergies between both organizations. Furthermore, the review will focus on the financing of the acquisition and any possible impact on the debt servicing obligations of Jupiter.

Jupiter Holdings writes commercial auto, general liability, specialty personal and surety business on both an admitted and excess and surplus lines basis. All eight affected Jupiter insurance companies are pooling participants and are rated “A+” (Superior). The lead insurance companies are Northland Insurance Co., which is domiciled in St. Paul; Northfield Insurance Co., St. Louis; American Equity Insurance Co., Scottsdale, Ariz.; and Washington International Insurance Co., Phoenix.

Associates First Capital Corp. is a Dallas-based diversified finance company providing consumer and commercial finance, leasing and related insurance products. On Aug. 11, 1998, Associates announced its plan to purchase Avco Financial Services for $3.9 billion. All insurance subsidiaries of Avco Financial Services, Inc. – currently rated “A” (Excellent) – are also under review with developing implications.

Given Associates’ considerable financial flexibility, the ratings of the Associates Insurance Group are not affected by both actions. Life companies in this group include Associates Financial Life Insurance Co., rated “A+” (Superior); Associates Financial Life Insurance Company of Nevada, “FPR 7”. Property/casualty companies in the group include Associates Insurance Co., Commercial Guaranty Insurance Co., and Associates Lloyds Insurance Co. — all rated “A+” (Superior).

A.M. Best Co., established in 1899, is America’s oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best’s Web site at http://www.ambest.com.

CONTACT: A.M. Best Co.

Jeffrey Dunsavage, 908/439-2200, ext. 5618

dunsavj@ambest.com

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