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Fitch Assigns ACE INA Overseas Insurance Co. Ltd. 'AA' IFS
May 31, 2013 / 6:57 PM / in 5 years

Fitch Assigns ACE INA Overseas Insurance Co. Ltd. 'AA' IFS

(The following statement was released by the rating agency) CHICAGO, May 31 (Fitch) Fitch Ratings has assigned its 'AA' Insurer Financial Strength (IFS) rating to ACE INA Overseas Insurance Company Ltd. (AIOIC), a Bermuda domiciled, indirect wholly owned insurance subsidiary of ACE Limited (ACE). The Rating Outlook is Stable. A complete list of all ACE ratings follows at the end of this release. KEY RATING DRIVERS The rating rationale is based on AIOIC's position within ACE's organization structure and the integral role AIOIC plays in ACE's global risk management business operations, which under Fitch's group rating methodology supports the inclusion of AIOIC within the existing ACE group IFS rating of 'AA'. Fitch's decision to use its group rating methodology rather than a stand-alone approach is a function of 1) ACE's willingness to provide support to AIOIC, including an assessment of AIOIC's strategic importance to ACE, and support between group members, and 2) ACE's ability to provide support to AIOIC, including an assessment that ACE's financial flexibility and liquidity position allows for shifting of resources throughout the organization as necessary, and consideration of any external barriers that may restrict movement of capital and resources between affiliates. Fitch considers AIOIC to have a 'core' strategic importance to ACE. AIOIC is a key and integral part of the group's business and strategy. The company's primary role is to act as an affiliate reinsurer with respect to multinational large account risk management business written by other ACE Limited companies, including operations in Asia and Latin America. AIOIC has demonstrated a history of success in supporting group objectives. Prospects for future success are consistent with that of other core ACE companies, and many synergies and complements exist between ACE's core companies and AIOIC. ACE's ratings reflect the company's continued strong operating performance despite competitive market conditions, strong balance sheet position and financial flexibility with moderate leverage, and diverse sources of revenues and earnings. ACE's operating performance is consistently strong, characterized by low combined ratios with manageable catastrophe losses and consistent favorable loss reserve development and stable investment income. RATING SENSITIVITIES Key rating triggers that may lead to an upgrade on a group, consolidated basis include very strong operating performance with a combined ratio consistently under 85%, material stockholders' equity growth, and maintaining a track record of successful acquisition execution while managing financial leverage to under 20% and run-rate leverage at or under 15%. Fitch expects operating earnings-based interest and preferred dividend coverage to remain at or above 15x, and for ACE's retention ratio (net premium written to gross premium written) to increase over time to be more in line with highly-rated peers. Key rating triggers that may lead to a downgrade on a group, consolidated basis include a sustained material deterioration in operating performance such that the combined ratio is consistently less profitable at over 95%, a significant 15%-20% reduction in stockholders' equity that is not recovered in the near term, and financial leverage consistently over 25%. Potential for future acquisitions and the associated integration risks and company profile changes could lead to pressure on the ratings, upward or downward, depending on the nature and size of the acquisition and corresponding integration risks. Additionally, the following negative rating triggers could cause Fitch to determine that AIOIC is no longer considered 'core' to ACE Limited, and thus may have an effect on Fitch's ability or willingness to group the AIOIC rating and result in a downgrade(s): Failure to maintain roughly 120% of AIOIC's Bermuda Solvency Capital Requirement model (BSCR) Target Capital Level, or emerging trends pointing to a change in ACE's strategy or company profile such that AIOIC's importance to ACE is lessened or ACE does not support AIOIC as necessary and as a result AIOIC is in a weaker financial or business position. The disposal, sale, or placement into run off of a core affiliate will almost always cause Fitch to re-evaluate its group assessment. Fitch has assigned the following rating with a Stable Outlook: ACE INA Overseas Insurance Company Ltd. --IFS 'AA'. Fitch currently rates ACE Limited and related entities as follows: ACE Limited --Issuer Default Rating (IDR) 'AA-'. ACE INA Holdings Inc. --IDR 'AA-'; --$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+'; --$475 million senior notes due 2023 'A+'; --$100 million senior debentures due 2029 'A+'; --$300 million senior notes due 2036 'A+'; --$475 million senior notes due 2043 'A+'. ACE Capital Trust II --$300 million capital securities due 2030 'A-'. 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 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 --IFS 'AA'. The Rating Outlook is Stable. Contact: Primary Analyst Gretchen Roetzer Director +1-312-606-2327 Fitch Ratings, Inc. 70 W. Madison Street Chicago, IL 60602 Secondary Analyst James B. Auden, CFA Managing Director +1-312-368-3146 Committee Chairperson Keith M. Buckley, CFA Managing Director +1-312-368-3211 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: --'Insurance Rating Methodology' (Jan. 11, 2013). Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE 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 EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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