OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has removed from under review with developing implications and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of Ironshore Insurance Ltd. (Bermuda) and its affiliated operating companies: Ironshore Indemnity Inc. (Minneapolis, MN), Ironshore Specialty Insurance Company (Scottsdale, AZ) and Ironshore Europe Designated Activity Company (Ireland) (collectively referred to as Ironshore). Concurrently, A.M. Best has also removed from under review with developing implications and affirmed the Long-Term ICR of “bbb” of Ironshore Inc. (Cayman Islands). The outlook assigned to these Credit Ratings (ratings) is stable.
These rating actions follow Liberty Mutual Holding Company Inc.’s (LMHC) (Boston, MA) completed acquisition, through its wholly-owned subsidiary Liberty Mutual Insurance Company, of 100% ownership of Ironshore Inc. and its subsidiaries from Ironshore’s former parent, Fosun International Limited (Fosun), for approximately $3.0 billion, or 1.45 times Ironshore’s tangible book value at year-end 2016.
Ironshore’s ratings reflect the company’s enhanced business profile under the ownership of the Liberty Mutual Insurance Companies (Liberty Mutual), which maintains strong brand recognition and a dominant market profile as the fourth largest property/casualty insurer in the United States. Ironshore’s existing business profile, in conjunction with its integration into Liberty Mutual’s operations, should solidify its position as a leader in the specialty insurance market. Also reflected in the rating are Ironshore’s strong risk-adjusted capitalization and its effective optimization of distribution channels in viewing a broad spectrum of submissions to develop a select portfolio of global specialty business.
Prior to its acquisition by Liberty Mutual, Ironshore was successful in organically building out a profitable book of business despite a highly competitive marketplace. A.M. Best expects Ironshore’s senior management and core book of business to benefit Liberty Mutual as it builds out its specialty business segment, making the combined operations a significant player in the space.
Partially offsetting these positive factors is the execution risk of integrating Ironshore’s operations into the Liberty Mutual organization. Additionally, while the combined business will have increased scale and added capacity, market conditions remain challenging, particularly for organic growth.
As A.M. Best initially commented on Dec. 5, 2016 when the acquisition was announced, the ratings of LMHC and its subsidiaries will remain unchanged. The modest size of the transaction, along with Ironshore’s historical profitability, limits LMHC’s execution and integration risks associated with the acquisition. A.M. Best will continue to monitor the progress of Ironshore’s integration into the Liberty Mutual organization.
Rating factors that could lead to positive rating movement include sustained long-term improvements in operating performance while maintaining strong levels of risk-adjusted capitalization.
The rating factors that could lead to negative ratings actions include a failure to successfully integrate Ironshore into the wider Liberty Mutual group or a material decline in operating performance or risk-adjusted capitalization.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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