(The following statement was released by the rating agency)
CHICAGO, March 06 (Fitch) Fitch Ratings expects to assign an 'A'
rating to the
$500 million and $450 million senior unsecured note issuance
planned by ACE INA
Holdings Inc., a subsidiary of ACE Limited (ACE). The new notes
will be fully
and unconditionally guaranteed by ACE and are therefore based on
Issuer Default Rating (IDR). Fitch expects that the net proceeds
from this new
senior debt issuance will refinance $950 million of existing
debt maturing in
2014 and 2015.
On Nov. 13, 2012, Fitch affirmed all of its ratings for ACE and
subsidiaries. The Rating Outlook is Positive. (A complete list
follows at the end of this release.)
KEY RATING DRIVERS
The anticipated rating action reflects ACE's continued strong
performance, balance sheet and financial flexibility, and
diverse sources of
revenues and earnings. Fitch views the debt issuance favorably
since the debt
will likely be issued at lower interest rates than the existing
debt, and the
maturities will be extended, eliminating near-term refinancing
Following the completion of ACE's financing plans, the company's
pro forma Dec.
31, 2012 total debt to capital ratio will temporarily increase
roughly 17.9% from 15.6% until the expiring debt is paid off.
Fitch views this
as a reasonable amount of financial leverage for a company with
ACE's cash flow
and earnings profile. ACE's operating earnings-based interest
coverage has been
strong at 12.6 times (x) in 2012 and 2011, both years with large
losses. Fitch's expectation is that the company's interest
continue to be favorable in the near term.
Key rating triggers that may lead to an upgrade include
operating performance with a combined ratio consistently under
stockholders' equity growth, and maintaining a track record of
acquisition execution while managing financial leverage to under
25% total debt
to capital and run-rate leverage at or under 20%. Fitch expects
earnings-based interest and preferred dividend coverage to
remain at or above
10x, and for ACE's retention ratio (net premium written to gross
written) to increase over time to be more in line with
Key rating triggers that may lead to a downgrade include a
deterioration in operating performance such that the combined
consistently unprofitable at over 100%, a significant reduction
equity that is not recovered in the near term, and financial
consistently over 30%.
Potential for future acquisitions and the associated integration
company profile changes could lead to pressure on the ratings,
depending on the
Fitch expects to assign the following ratings:
ACE INA Holdings Inc.
--$500 million senior notes due 2023 'A';
--$450 million senior notes due 2043 'A'.
Fitch currently rates the ACE Limited companies as follows:
--Issuer Default Rating (IDR) 'A+'.
ACE INA Holdings Inc.
--$500 million senior notes due 2014 'A';
--$450 million senior notes due 2015 'A';
--$700 million senior notes due 2015 'A';
--$500 million senior notes due 2017 'A';
--$300 million senior notes due 2018 'A';
--$500 million senior notes due 2019 'A';
--$100 million senior debentures due 2029 'A';
--$300 million senior notes due 2036 'A'.
ACE Capital Trust II
--$300 million capital securities due 2030 'BBB+'.
ACE American Insurance Company
ACE Bermuda Insurance Limited
ACE Fire Underwriters Ins. Company
ACE Insurance Company of the Midwest
ACE Property and Casualty Insurance Company
ACE Tempest Reinsurance Limited
Agri General Insurance Company
Atlantic Employers Insurance Company
Bankers Standard Fire & Marine Company
Bankers Standard Insurance Company
Combined Insurance Company of America
Combined Life Insurance Company of New York
Illinois Union Insurance Company
Indemnity Insurance Company of North America
Insurance Company of North America
Pacific Employers Insurance Company
Westchester Fire Insurance Company
Westchester Surplus Lines Insurance Company
The Rating Outlook is Positive.
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
James B. Auden, CFA
Keith M. Buckley, CFA
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'.
The ratings above
were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been
compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (Jan. 11, 2013).
Applicable Criteria and Related Research
Insurance Rating Methodology â€” Amended
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