(The following statement was released by the rating agency)
CHICAGO, September 05 (Fitch) Fitch Ratings has assigned a 'BBB'
Alleghany Corporation's (Alleghany) $300 million 4.9% senior
issuance due 2044. The rating is equivalent to Fitch's ratings
existing senior unsecured notes. A complete list of ratings
follows at the end
of this release.
KEY RATING DRIVERS
Alleghany intends to use the net proceeds from the sale of the
senior notes to
redeem a portion of the $667 million 5.75% senior notes due
December 2015 of its
subsidiary, Transatlantic Holdings, Inc. (Transatlantic).
Alleghany's financial leverage ratio was reasonable for the
rating category at
19.8% at June 30, 2014, down slightly from 20.4% at year-end
earnings-based interest coverage was a strong 8.7x in both the
first half of
2014 and in 2013. Fitch expects the company to maintain coverage
levels of at
least 7x. Financial leverage and interest coverage ratios are
not expected to
change meaningfully given the issuance will be used to replace
Alleghany maintained a beneficial amount of holding company cash
securities of $1,047 million at June 30, 2014. Fitch believes
that this resource
provides the company an additional favorable cushion in meeting
operating subsidiary company cash flow shortages and liquidity
to service its
Alleghany posted net earnings of $354 million in the first six
months of 2014,
compared to $310 million in first-half 2013 and $628 million for
These favorable results are driven by solid underwriting
performance in both its
reinsurance and insurance segments, with manageable catastrophe
favorable loss reserve development at Transatlantic and RSUI
Group, Inc. Total
GAAP stockholders' equity of $7.4 billion at June 30, 2014, is
up from $6.9
billion at Dec. 31, 2013, as favorable net income and an
increase in unrealized
investment gains was partially offset by share repurchases.
Key rating triggers that could result in a downgrade include
loss reserve development; movement to materially below-average
operating performance; sizable deterioration in subsidiary
caused net written premiums-to-surplus to exceed 1x for
and 1.2x for insurance operations; financial leverage maintained
run-rate operating earnings-based interest and preferred
dividend coverage of
less than 7x; significant acquisitions that reduce the company's
flexibility; and a substantial decline in the holding company's
Key rating triggers that could lead to an upgrade over the long
continued favorable underwriting results in line with higher
property/casualty (re)insurer peers; material improvement in key
metrics (e.g. net premiums written to equity) to more
and enhanced competitive positioning while maintaining strong
low earnings volatility. In addition, the ratings of RSUI could
be upgraded over
time should Fitch consider the ratings core relative to the
Fitch has assigned the following rating:
--$300 million 4.9% senior debt due Sept. 15, 2044 'BBB'.
Fitch currently rates Alleghany as follows:
--Issuer default Rating (IDR) 'A-';
--$300 million 5.625% senior notes due Sept. 15, 2020 'BBB';
--$400 million 4.95% senior notes due June 27, 2022 'BBB'.
Transatlantic Holdings, Inc.
--$667 million 5.75% senior notes due Dec. 14, 2015 'BBB+';
--$350 million 8.00% senior notes due Nov. 30, 2039 'BBB+'.
Transatlantic Reinsurance Company
Fair American Insurance and Reinsurance Company
--Insurer Financial Strength (IFS) 'A+'.
RSUI Indemnity Company
Covington Specialty Insurance Company
Landmark American Insurance Company
The Rating Outlook is Stable
Brian C. Schneider, CPA, CPCU, ARe
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
Christopher A. Grimes, CFA
Donald F. Thorpe, CPA, CFA
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'.
The issuer did
not participate in the rating process, or provide additional
the issuer's available public disclosure.
Applicable Criteria and Related Research:
--Insurance Rating Methodology (Sept. 4, 2014).
Applicable Criteria and Related Research:
Insurance Rating Methodology
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.
DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH