Moody's rate­sace INA Hold­ings' se­nior debt

The Pak Banker - - COMPANIES/BOSS -

Global rat­ing agency Moody's has as­signed pro­vi­sional rat­ings to the mul­ti­is­suer/multi-se­nior­ity shelf of ACE Lim­ited ( NYSE: ACE), in­clud­ing ACE INA Hold­ings (pro­vi­sional se­nior and subor­di­nated un­se­cured debt at (P)A3 and (P)Baa1, re­spec­tively) and ACE Cap­i­tal Trusts III & IV (pro­vi­sional trust pre­ferred se­cu­ri­ties at (P)Baa1), based on un­con­di­tional guar­an­tees from ACE Lim­ited. The out­look for the pro­vi­sional rat­ings is sta­ble.

Ac­cord­ing to Moody's, the rat­ings re­flect ACE Lim­ited's solid com­pet­i­tive po­si­tion in its prin­ci­pal busi­ness seg­ments, its di­ver­si­fied in­ter­na­tional spread of risk and good in­ter­nal liq­uid­ity, and its sound cap­i­tal­iza­tion and fi­nan­cial flex­i­bil­ity on a con­sol­i­dated ba­sis.

Th­ese fun­da­men­tal strengths are tem­pered by chal­lenges as­so­ci­ated with man­ag­ing and main­tain­ing un­der­writ­ing dis­ci­pline across a com­plex global op­er­a­tion, the in­trin­sic volatil­ity of some of ACE's in­surance and rein­sur­ance busi­nesses, and ex­po­sure to nat­u­ral catas­tro­phes and ad­verse claim trends. ACE is en­gaged through its sub­sidiaries in pro­vid­ing in­sur- ance, rein­sur­ance and ser­vices to cor­po­rate and in­surance com­pany clients on a global ba­sis. Busi­ness is con­ducted through sub­sidiaries in mul­ti­ple ju­ris­dic­tions, the most sig­nif­i­cant of which in­clude ex­cess in­surance at ACE Ber­muda In­surance, Ltd (Aa3 IFSR), prop­erty catas­tro­phe and multi-line rein­sur­ance (ACE Global Rein­sur­ance, in­clud­ing ACE Tem­pest Re Ltd. - Aa3 IFSR), and US and in­ter­na­tional gen­eral in­surance (ac­tive mem­bers of the ACE USA in­ter­com­pany pool - A1 IFSR; ACE In­ter­na­tional and ACE Global Mar­kets (Lloyd's op­er­a­tions).

The cur­rent rat­ings re­flect our ex­pec­ta­tion that ACE will con­tinue to sus­tain its strong mar­ket po­si­tion and build upon its global plat­form, that the com­pany's re­turn on cap­i­tal will ex­ceed 8% over the cy­cle, con­sol­i­dated op­er­at­ing lever­age will re­main mod­er­ate, and ad­verse re­serve devel­op­ment in­clud­ing as­bestos and en­vi­ron­men­tal (A&E) will be mod­est (less than 5% of car­ried re­serves).

In ad­di­tion, the rat­ings con­tem­plate fully ad­justed fi­nan­cial lever­age will re­main less than 30% with earn­ings cov­er­age of in­ter­est and pre­ferred div­i­dends cov­er­age of at least 8x.

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