A.M. Best has placed under review with negative implications the
financial strength rating (FSR) of A+ (Superior) and the issuer credit
ratings (ICR) of "aa-" of AXIS Specialty Limited (AXIS)
and its operating affiliates. Concurrently, the ICR of “a-” of AXIS
Capital Holdings Limited (ACHL) (both domiciled in Hamilton,
Bermuda) [NYSE: AXS] has been placed under review with negative
implications following the recent announcement that ACHL and PartnerRe
Ltd have signed a definitive amalgamation agreement. A.M. Best has
also placed under review with negative implications the existing debt
ratings of ACHL. (See below for a detailed list of the companies and
ratings.)
The under review status reflects A.M. Best’s concern associated with
this merger’s size, scope and complexity. Along with combining two
company cultures under one leadership team, the successful integration
will need to be completed in a timely manner and optimize operational
and systems infrastructure while retaining key personnel. During the
integration period, A.M. Best believes there is greater inherent risk to
the ongoing operations of the combined company. This transaction has
inherent execution risk although this is partially mitigated by the
collaborative nature of both management teams.
Looking beyond the aforementioned risk factors, there is a fundamentally
strong strategic rationale for this transaction. This combination brings
two strong companies together that will have enhanced scale, a more
diversified product mix and the transaction offers the ability to
generate meaningful capital efficiencies and synergies.
The under review status will be removed once the transaction has closed
and A.M. Best reviews the final integration plan. Factors that could
lead to a rating downgrade or an outlook revision to negative include
A.M. Best’s view that the transaction and integration plan represent a
potentially material risk to the organization. Factors that could lead
to a stabilization of the ratings include a sound and streamlined
integration plan and retention of key personnel.
The FSR of A+ (Superior) and the ICRs of "aa-" for AXIS
Specialty Limited and its following operating affiliates have been
placed under review with negative implications:
-
AXIS Re SE
-
AXIS Reinsurance Company
-
AXIS Specialty Europe SE
-
AXIS Surplus Insurance Company
-
AXIS Insurance Company
The following debt ratings have been placed under review with negative
implications:
AXIS Capital Holdings Limited—
-- "bbb" on $250 million
7.50% non-cumulative preferred shares, Series B
-- "bbb" on $400
million 6.875% non-cumulative preferred shares, Series C
-- "bbb"
on $200 million 5.5% non-cumulative preferred shares, Series D
AXIS Specialty Finance LLC (guaranteed by AXIS Capital Holdings
Limited)—
-- "a-" on $500 million 5.875% senior unsecured notes,
due 2020
The following indicative ratings under the current shelf registration
have been placed under review with negative implications:
AXIS Capital Holdings Limited—
-- "a-" on senior unsecured
debt
-- "bbb+" on subordinated debt
-- "bbb" on
preferred stock
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
-
Rating Members of Insurance Groups
-
Risk Management and the Rating Process for Insurance Companies
-
Insurance Holding Company and Debt Ratings
This press release relates to rating(s) that have been published on
A.M. 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 visit A.M. Best’s Ratings
& Criteria Center.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.
Copyright Business Wire 2015