AM Best Comments on Credit Ratings of Ohio National Financial Services, Inc. and Its Subsidiaries Following Announced Strategic Transaction with Constellation Insurance Holdings, Inc.
March 30, 2021 by AM Best
OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has commented that the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of The Ohio National Life Insurance Company and its wholly owned subsidiary, Ohio National Life Assurance Corporation (together referred to as the Ohio National Life Group), remain unchanged following the announcement that it has agreed to pursue a strategic transaction with Constellation Insurance Holdings, Inc. (Constellation). These companies are the principal insurance subsidiaries of Ohio National Financial Services, Inc. (ONFS), which is an intermediate holding company wholly owned by Ohio National Mutual Holdings, Inc. (ONMH). Concurrently, the FSR of A- (Excellent) and the Long-Term ICR of “a-” of National Security Life and Annuity Company (NSLAC) remains unchanged, as does the Long-Term ICR of “bbb+” and Long-Term Issue Credit Ratings (Long-Term IR) of ONFS. The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Cincinnati, OH.
The announced transaction includes the conversion of ONMH to a stock company and the issuance of all of its newly issued stock to Constellation, pursuant to a sponsored demutualization. Constellation, an insurance holding company, is backed by Caisse de dépôt et placement du Québec (CDPQ) and Ontario Teachers’ Pension Plan Board (Ontario Teachers). The sponsored demutualization provides for Constellation to fund cash payments or policy benefits in the aggregate amount of $500 million, to be paid or provided to eligible members in exchange for the extinguishment of their membership interests in ONMH. Additionally, as part of the transaction, Constellation and its investors are providing a commitment to infuse an additional $500 million of capital over a four-year period following the closing of the transaction. Upon closing of the transaction, Ohio National will maintain its management team and brand, and will continue to be headquartered in Cincinnati. The transaction is subject to customary conditions, including regulatory approvals and ONMH’s member approval. It is anticipated that the transaction will close in the second half of 2021.
Given the intended structure of the transaction and the nature and timing of the expected capital support from Constellation, as well as the expectation that the existing management team and business model will remain intact post-acquisition, AM Best believes that the credit profile of the Ohio National Life Group is unlikely to change over the near term. AM Best will continue to monitor the progress of the transaction, as well as any financial or strategic developments as they emerge.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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