AM Best has commented that the financial strength rating of ‘A’ (Excellent) and the long-term issuer credit ratings (ICRs) of ‘a’ (Excellent) of Great Midwest Insurance Company (GMIC), Houston Specialty Insurance Company (HSIC), Oklahoma Specialty Insurance Company (OSIC), and Imperium Insurance Company (IIC) are unchanged following the announcement that Skyward Specialty Insurance Group has agreed to acquire 100 per cent of Apollo Group Holdings. These Skyward Specialty Insurance Group subsidiaries belong to its parent, Skyward Group, which has a long-term ICR of ‘bbb’ (Good). The agency says these credit ratings are reflective of Skyward’s ‘very strong’ balance sheet strength, in conjunction with its adequate operating performance, neutral business profile, and appropriate enterprise risk management. Best does not expect the transaction to have any material change to Skyward’s current ratings, although they will continue to monitor the effects and progress of this acquisition over time, with potential benefits from the planned synergies and efficiencies gained from the transaction, which the agency says could benefit Skyward’s business profile. Best has highlighted the 25 per cent financial leverage increase, although Skyward expects to manage this over time, in addition to the execution risk as noted in any significant acquisition. Moreover, in the short to medium term, Skyward is said to be planning on maintaining strong interest coverage without taking dividends from the insurance subsidiaries, with Apollo providing it a stream of unregulated earnings and cash flow, reducing the organisation's reliance on its statutory entities.
