17 Insurers See Ratings Updates
Allied, Guardian Life, Principal Financial and 14 others receive updates.
Insurance Networking Ratings Corner, November 20, 2012
A.M. Best, Fitch Ratings, Standard & Poor’s (S&P’s) and Moody’s Investors Service released ratings updates. The following are some of the most recent:
ACE Ltd. and its subsidiaries
Fitch has affirmed the ratings of ACE Ltd. and its subsidiaries (collectively, ACE). The Rating Outlook is Positive.
The rating actions reflect ACE's continued strong operating performance, balance sheet and financial flexibility, and diverse sources of revenues and earnings. Partially offsetting these positives is the effect of modestly rising accident-year combined ratios, and the effect of continued, significant competition in the company's chosen markets.
Fitch expects that ACE's insurance and reinsurance losses from Hurricane Sandy will be more of an earnings event, rather than a capital event. While the amount of loss is uncertain at this early stage, Fitch anticipates the level to be manageable, given the company's diverse global book of business, strong capitalization and operating performance with below-average catastrophe losses through the first nine months of 2012, and conservative risk management.
Allied World Assurance Co. Holdings AG and its subsidiaries
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent and the issuer credit ratings (ICR) of “a” of Allied World Assurance Co. Ltd. (Allied World) and its operating affiliates. The outlook for the FSR is stable, while the outlook for the ICRs is positive.
A.M. Best also has affirmed the ICR of “bbb” of the ultimate parent, Allied World Assurance Co. Holdings AG (Switzerland), which unconditionally and irrevocably guarantees both senior debt issuances of Allied World Assurance Co. Holdings Ltd. (Allied World Holdings Bermuda).
In addition, A.M. Best has affirmed the positive outlook of the ICR of “bbb” as well as the debt ratings of “bbb” on $500 million, 7.50 percent senior unsecured notes, due 2016, and on $300 million, 5.5 percent senior unsecured notes, due 2020, of Allied World Holdings Bermuda. The outlook for these ratings is positive.
Fitch expects to assign a 'BBB+' rating to the $300 million, 30-year senior unsecured notes issuance planned by Aon plc (Aon), the ultimate parent company. Fitch also assigned a 'BBB+' Issuer Default Rating (IDR) to Aon. The new notes are fully and unconditionally guaranteed by Aon Corp. (Aon Corp.), and the ratings are based, therefore, on Aon Corp.'s existing 'BBB+' IDR. The net proceeds from this new, senior debt issuance will refinance up to $300 million of Aon Corp.'s existing 8.205%, junior subordinated debt, maturing in 2027.
Additionally, Fitch has affirmed all of Aon's related ratings, including existing senior debt ratings at 'BBB+', and commercial paper rating at 'F2'. The Rating Outlook is Stable. The affirmation reflects Aon's strong competitive position, balance sheet and cash-flow generation, very good financial flexibility, and financial leverage that are within guidelines for the rating category.
Fitch views the proposed debt exchange favorably as the new senior debt likely will be issued at an attractive rate, given current market conditions, and will have a longer-dated maturity, resulting in an improved liquidity profile with reduced refinancing risk. Fitch does not expect material change to pro forma financial leverage, following the debt issuance, since the proceeds will be used to refinance existing subordinated debt, and the related premium to current bondholders will be paid in cash.
A.M. Best has affirmed the financial strength rating of A (Excellent) and issuer credit ratings of “a” of Aspen Specialty Insurance Co. (ASIC) and Aspen American Insurance Co. (AAIC). Both companies are wholly owned subsidiaries of their ultimate parent, Aspen Insurance Holdings Ltd. (Aspen). The outlook for all ratings is stable.
These ratings are based upon A.M. Best’s criteria “Rating Members of Insurance Groups” and take into consideration the roles and strategic importance of ASIC and AAIC to Aspen’s overall U.S. strategy. Additionally, the ratings reflect the explicit support provided through the substantial quota share reinsurance of ASIC and AAIC’s net business by their Bermuda-based affiliate, Aspen Bermuda Ltd. (ABL).
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