OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the issuer credit rating (ICR) outlook to stable from negative and affirmed the financial strength rating (FSR) of A (Excellent) and the ICRs of “a+” of the ongoing property/casualty (P/C) subsidiaries of XL Group Ltd (XL) (Bermuda) [NYSE:XL]. The outlook for the FSR remains stable. In addition, A.M. Best has revised the ICR and the issue rating outlooks to stable from negative and affirmed the ICRs of “bbb+” and the issue ratings of XLIT Ltd (Cayman Islands). A.M. Best also has assigned an ICR of “bbb+” to XL, which is the recently formed ultimate holding company that completed XL’s redomestication to Bermuda from Ireland. The outlook assigned to this rating is stable. Concurrently, A.M. Best has withdrawn the ICR of “bbb+” of XL Group plc (Ireland).
Additionally, A.M. Best has upgraded the ICRs to “a+” from “a” and affirmed the FSR of A (Excellent) of Catlin Insurance Company Ltd. (CICL) (Bermuda), the lead operating entity of the Catlin group of companies, and its insurance subsidiaries. At the same time, the issue ratings of the preference share issues by CICL have been upgraded to “bbb+” from “bbb”. A.M. Best also has upgraded the ICR to “bbb+” from “bbb” of Catlin Underwriting (CU) (United Kingdom), a non-operating holding company. The outlook for the ICRs has been revised to stable from positive, while the outlook for the FSR remains stable. (See below for a detailed listing of the companies and ratings.)
A.M. Best also has affirmed the FSR of B++ (Good) and the ICR of bbb+ of XL Life Ltd (Bermuda). The outlook for each of the ratings is stable.
A.M. Best views the integration of Lloyd’s Syndicate 2003 into XL as enhancing the distribution available to the syndicate. The syndicate, which is managed by Catlin Underwriting Agencies Limited, had its rating outlooks revised to stable from positive and the FSR of A (Excellent) and the ICR of “a+” affirmed on July 21, 2016. The syndicate’s ratings reflect Lloyd’s financial strength, which underpins the security of all Lloyd’s syndicates.
Furthermore, A.M. Best has removed from under review with positive implications and affirmed the FSR of A- (Excellent) and the ICR of “a-” of T.H.E. Insurance Company (New Orleans, Louisiana), which was recently acquired by an XL subsidiary. The outlook assigned to each rating is positive. The assigned outlook recognizes the positive rating attributes provided by XL as the new ultimate parent and owner, including strong financial and operational resources.
The rating affirmations of XLs and the rating upgrades of CICL reflect A.M. Best’s reduced concern as it regards the integration progress of the XL Catlin acquisition that closed in May 2015. While the XL organization still has a substantial amount of work to do in order to achieve the greatest efficiencies and long-term gains, A.M. Best believes that a significant portion of the uncertainty and risk around a complex transaction such as this one is now materially less to the organization.
The upgrade of the legacy Catlin entities’ ICRs reflects A.M. Best’s view that, if needed, XL would support these entities in the same manner as XL’s ongoing P/C subsidiaries. Additionally, A.M. Best anticipates that over time, the Catlin insurance entities will continue to be integrated into the XL framework.
Factors that could lead to a downgrade of the ratings include strained operating performance, outsized investment or catastrophe losses, or a significant drop in risk-adjusted capitalization. Factors that could lead to an upgrade of the ratings include a continuation of a sound and streamlined integration process, moderated debt and leverage measures and solid operating results coupled with strong risk-adjusted capitalization.
The ICR outlook has been revised to stable from negative and the FSR of A (Excellent) and the ICRs of “a+” have been affirmed. The outlook for the FSR remains stable for the following subsidiaries of XL Group Ltd:
- XL Bermuda Ltd
- Indian Harbor Insurance Company
- Greenwich Insurance Company
- XL Insurance Company of New York, Inc.
- XL Insurance America, Inc.
- XL Select Insurance Company
- XL Reinsurance America Inc.
- XL Specialty Insurance Company
- XL Re Latin America Ltd
- XL Insurance Company SE
- XL Re Europe SE
- XL Insurance Switzerland Ltd
The ICRs have been upgraded to “a+” from “a” and the FSR of A (Excellent) has been affirmed. The outlooks for the ICRs have been revised to stable from positive, while the outlook for the FSR remains stable for the following subsidiaries of Catlin Insurance Company Ltd.:
- Catlin Indemnity Company
- Catlin Insurance Company (UK) Ltd.
- Catlin Insurance Company Inc
- Catlin Re Switzerland Ltd
- Catlin Specialty Insurance Company
The outlooks have been revised to stable from negative, while the issue ratings have been affirmed for the following issue ratings:
--“bbb+” on $350 million 6.375% senior unsecured notes, due 2024
--“bbb+” on $325 million 6.25% senior unsecured notes, due 2027
--“bbb-” on $999.5 million 6.5% Series E non-cumulative preferred securities, redeemable 2017
--“bbb+” on $400 million 5.75% senior unsecured notes, due 2021
--“bbb+” on $300 million 2.30% senior unsecured notes, due 2018
--“bbb+” on $300 million 5.25% senior unsecured notes, due 2043
--“bbb-” on $345 million Series D non-cumulative preferred securities
--“bbb” on $500 million 4.45% subordinated notes, due 2025
--“bbb” on $500 million 5.5% subordinated notes, due 2045
The outlooks have been revised to stable from negative, while the issue ratings for the following indicative issue ratings have been affirmed on shelf securities:
--“bbb+” on senior unsecured debt
--“bbb” on subordinated debt
--“bbb-” on preferred stock
The following issue ratings been upgraded and the outlook has been revised to stable from positive for the following securities of Catlin Insurance Company Ltd.—
--to “bbb+” from “bbb” on USD 600 million 7.249% preferred stock
This press release relates to rating(s) 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.
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