Meadowbrook Cuts Credit Facility 70% to Meet Loan Covenants
Meadowbrook Insurance Group Inc. (MIG), the insurer that had its rating cut last month by A.M. Best, agreed to reduce the funds available on a credit facility in a deal to comply with loan covenants.
The commitment was lowered to $30 million from $100 million and is to be reduced to $21 million on March 31, 2016, the Southfield, Michigan-based insurer said today in a regulatory filing. Meadowbrook will also pay higher interest rates under the facility with banks led by JPMorgan Chase & Co. (JPM)
The insurer has been coping with losses after determining it hadn’t set aside enough funds for claims. The downgrade by the ratings firm fueled a second-quarter impairment, and the company’s stock has lost 20 percent since June 30.
“We believe the company is in a strong financial position to return to profitability,” Chief Financial Officer Karen Spaun said in a statement today. “We are pleased with the agreement to our credit facility.”
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