Moody's ratesace INA Holdings' senior debt
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.