16 Insurers See Ratings Updates
OneBeacon placed under rating watch negative; Aon, CIGNA, Zurich and several others receive updates.
Insurance Networking Ratings Corner, October 23, 2012
A.M. Best, Fitch Ratings, and Moody’s Investors Service released ratings updates. The following are some of the most recent:
American International Assurance Co. (Bermuda) Ltd.
Moody's has affirmed the Aa3 insurance financial strength rating of American International Assurance Co. (Bermuda) Ltd. (AIA Bermuda), with a stable outlook.
The affirmation follows AIA Group Ltd.'s (AIA Group, unrated) statement that it has agreed to acquire ING Management Holdings (Malaysia) Sdn. Bhd. (ING Malaysia). On Oct. 11, the AIA Group said it will acquire the entire share capital of ING Malaysia via its wholly-owned subsidiary, American International Assurance Co. Ltd., for $1.73 billion in cash.
AIA Group plans to pay the amount after the completion of the deal, which is likely to close by the end of Q1 2013, and is subject to approvals from Bank Negara Malaysia, the Ministry of Finance of Malaysia, and the Securities Commission of Malaysia, as well as a statement of no objection from the Dutch Central Bank.
Moody's has assigned provisional ratings to the shelf registration of Aon Plc. and Aon Corp. (Aon Corp.), and has affirmed the group's existing ratings. The newly assigned shelf ratings include (P)Baa2 ratings on guaranteed senior unsecured debt of Aon or Aon Corp., and (P)Baa3 ratings on guaranteed subordinated debt of Aon or Aon Corp. Moody's has assumed that any debt issued off the shelf by Aon would be guaranteed by Aon Corp., and any debt issued off the shelf by Aon Corp. would be guaranteed by Aon.
Proceeds from the sale of securities off the shelf will be used for general corporate purposes, including securities repurchase programs, capital expenditures, working capital, debt repayment and acquisitions. The rating outlook for Aon is stable.
Aon's ratings reflect its strong market presence and its expertise in providing risk and human resources solutions to middle-market, national and global clients, according to Moody's. The ratings also reflect Aon's broad geographic and product diversification. These strengths are tempered by the company's financial leverage and fixed-charge coverage metrics, which are somewhat weak for its rating category. Also, like other insurance brokers, Aon faces the challenges of slow economic growth, particularly in the United States and Europe, and potential liabilities arising from errors and omissions.
Fitch has affirmed AXIS Capital Holdings Ltd.'s (AXIS Capital) 'A' Issuer Default Rating (IDR) and 'A-' senior debt rating. Additionally, Fitch has affirmed the 'A+' Insurer Financial Strength (IFS) ratings of AXIS Capital's operating subsidiaries. The rating outlook is stable.
Fitch's ratings reflect AXIS Capital's solid history of underwriting results, strong capitalization, and conservative investment profile and reserving practices. Offsetting factors include the company's significant catastrophe exposure.
AXIS Capital has demonstrated solid underwriting results, with a 10-year average combined ratio of 85.3 percent, ending Dec. 31, 2011, which is better than its Bermuda peers. The company reported a 93.6 percent combined ratio for the first six months of 2012, which is a significant improvement from the prior-year period's combined ratio of 129.1 percent. Catastrophe losses contributed 5.9 percentage points and 43 percentage points to the combined ratio in the respective periods, which did not appear to be out of proportion with AXIS Capital's market share or relative to peer experience.
CIGNA Europe Insurance Co. S.A.-N.V.
A.M. Best Europe has assigned a financial strength rating of A (Excellent) and issuer credit rating of “a” to CIGNA Europe Insurance Co. S.A.-N.V. (CEIC). The outlook assigned to both ratings is stable.
The ratings reflect CEIC’s strong level integration with its sister company, Cigna Life Insurance Co. of Europe S.A.-N.V. (CLICE), together with its strong level of risk-adjusted capitalization and sound financial performance.
The Cigna Corp. (Cigna) channels its European business through its two insurance subsidiaries, CLICE and CEIC. Although the majority of gross premiums are written directly by CLICE, regulations in various jurisdictions mean that CEIC is essential for the group to service its clients effectively. CEIC not only accepts non-life risks that are bundled within Cigna products, but also accepts core medical products that require a non-life license within certain jurisdictions. CEIC’s gross premium written is expected to grow from around EUR 30 million, in 2011, to more than EUR 60 million in 2014. The company will benefit from Cigna’s acquisition of FirstAssist in 2011, which generates a significant volume of travel business.
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