(The following statement was released by the rating agency)
CHICAGO, November 29 (Fitch) Fitch Ratings has affirmed the 'A+'
Rating (IDR) of Chubb Limited and the 'AA' Insurer Financial
rating of its insurance operating subsidiaries. The Rating
Outlook for all
ratings is Stable. A complete list of ratings follows at the end
KEY RATING DRIVERS
On Jan. 14, 2016 Chubb Limited was created when legacy ACE
acquired legacy Chubb
for approximately $29.5 billion, creating one of the largest
companies in the world.
Fitch views the transaction favorably due to the increased size
and scale of the
combined entity which is estimated to write roughly $36 billion
in global gross
written premiums with a little over one-third coming from
outside the United
States. Legacy ACE demonstrated past success in executing
acquisitions, but the size and complexity of the Chubb
acquisition represents a
unique challenge. However, the company recently raised its run
savings estimate by $50 million to $800 million by the end of
The combined company's rating strengths include a strong balance
and financial flexibility with moderate leverage and diverse
sources of revenues
and earnings with the advantages of increased global size and
scale and strong
Both legacy ACE and legacy Chubb's operating performance
peers, characterized by low combined ratios with manageable
consistent favorable loss reserve development and stable
investment income from
strong operating cash flow. However, past performance is no
indication of future
For analytical purposes Fitch utilizes pro forma 2016 figures
that treat the
acquisition as if it took place on Jan. 1 instead of Jan. 14.
With almost nine
months of combined operations, net written premiums were $22
billion, down about
3% from prior year period on a constant dollar basis. The
calendar year combined
ratio YTD 2016 remains favorable at 88.2%, relatively flat
compared to 87.6% for
the prior year period.
To fund this transaction legacy ACE raised $5.3 billion in debt
and about $15
billion in equity plus cash dividends. Stated financial leverage
was 22% as of
Sept. 30, 2016, which is consistent with rating tolerances.
Operating fixed charge coverage was 9.0 times (x) as of Sept.
30, 2016, which is
lower than historical averages due to the higher debt load but
still in line
with rating expectations. The new combined entity is anticipated
favorable debt servicing capacity from operating subsidiary
earnings, and other liquidity sources.
Key current rating triggers that may lead to an upgrade include:
--Given increased market position size and scale, demonstration
strong operating performance consistent with the individual
--A reduction in financial leverage to a run-rate level of
approximately 20% or
--Operating fixed charge coverage approximating 15x;
Key rating triggers that may lead to a downgrade include:
--A material deterioration in operating performance such that
the combined ratio
is consistently less profitable at over 95%;
--A significant reduction in stockholders' equity that is not
recovered in the
--Increase in financial leverage ratio to a sustained level of
--Failure to execute acquisition integration plans as expected
material economic impact on the company.
Fitch has affirmed the following ratings:
--Issuer Default Rating (IDR) at 'A+'.
Chubb INA Holdings Inc.
--IDR at 'A+';
--$500 million senior notes at 5.7% due 2017 at 'A';
--$300 million senior notes at 5.8% due 2018 at 'A';
--$500 million senior notes at 5.9% due 2019 at 'A';
--$1.3 billion senior notes at 2.3% due 2020 at 'A';
--$1 billion senior notes at 2.875% due 2022 at 'A';
--$475 million senior notes at 2.7% due 2023 at 'A';
--$700 million senior notes at 3.35% due 2024 at 'A';
--$800 million senior notes at due 3.15% 2025 at 'A';
--$1.5 billion senior notes at due 3.35% 2026 at 'A';
--$100 million senior debentures at 8.875% due 2029 at 'A';
--$300 million senior notes at 6.7% due 2036 at 'A';
--$475 million senior notes at 4.15% due 2043 at 'A';
--$1.5 billion senior notes at 4.35% due 2045 at 'A';
--$600 million senior notes at 5.75% due 2018 at 'A';
--$100 million senior notes at 6.6% due 2018 at 'A';
--$200 million senior notes at 6.8% due 2031 at 'A';
--$800 million senior notes at 6% due 2037 at 'A';
--$600 million senior notes at 6.5% due 2038 at 'A';
--$1 billion junior subordinated debentures at 6.375% due 2067
ACE Capital Trust II
--$300 million capital securities at 9.7% due 2030 at 'BBB+'.
ACE American Insurance Company
ACE Fire Underwriters Ins. Company
ACE INA Overseas Insurance Company Ltd.
ACE Insurance Company of the Midwest
ACE Property and Casualty Insurance Company
Agri General Insurance Company
Atlantic Employers Insurance Company
Bankers Standard Fire & Marine Company
Bankers Standard Insurance Company
Chubb Atlantic Indemnity Ltd.
Chubb Bermuda Insurance Limited
Chubb Custom Insurance Co.
Chubb Indemnity Insurance Co.
Chubb Insurance Company of Europe, S.E.
Chubb Insurance Company of New Jersey
Chubb Lloyds Insurance Company of Texas
Chubb National Insurance Co.
Chubb Reinsurance (Switzerland) Limited
Chubb Tempest Reinsurance Limited
Executive Risk Indemnity, Inc.
Executive Risk Specialty Insurance Co.
Federal Insurance Company
Great Northern Insurance Co.
Illinois Union Insurance Company
Indemnity Insurance Company of North America
Insurance Company of North America
Pacific Employers Insurance Company
Pacific Indemnity Co.
Texas Pacific Indemnity Company
Vigilant Insurance Co.
Westchester Fire Insurance Company
Westchester Surplus Lines Insurance Company
--IFS at 'AA'.
The Rating Outlook is Stable.
Fitch has withdrawn the 'AA' IFS Rating with a Stable Outlook
for the following
entities as they no longer exist:
Chubb Insurance Company of Australia Ltd.
Chubb Insurance Company of Canada
Gerald Glombicki, CPA
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
James B. Auden, CFA
Keith M. Buckley, CFA
Media Relations: Hannah James, New York, Tel: + 1 646 582 4947,
Additional information is available at 'www.fitchratings.com'.
Insurance Rating Methodology (pub. 15 Sep 2016)
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