Moody’s Affirms Ratings Of ACE Group
Moody’s Investors Service has affirmed the A3 senior debt rating of ACE INA Holdings Inc. whose debt is unconditionally guaranteed by the group parent company ACE Limited.
The insurance financial strength [IFS] ratings of ACE’s principal Bermuda-based operating subsidiaries — ACE Bermuda Insurance Ltd. and ACE Tempest Reinsurance Ltd [Bermuda] have been affirmed at Aa3, and ratings on members of the ACE USA’s property & casualty group have been affirmed at A1. The outlook for the ratings is stable.
According to Moody’s, the parent company’s ratings reflect ACE Limited’s solid competitive position in its principal business segments, its diversified international spread of risk and good internal liquidity, and its sound capitalization and financial flexibility on a consolidated basis. These fundamental strengths are tempered by challenges associated with managing and maintaining underwriting discipline across a complex global operation, the intrinsic volatility of some of ACE’s insurance and reinsurance businesses, and exposure to natural catastrophes and adverse claim trends.
According to Alan Murray, lead analyst for ACE Limited, “ACE is one of the leading global property/casualty insurers and has demonstrated a consistent franchise-building strategy in the US, Europe and diverse international markets. Additionally, the group has maintained balance sheet and operational discipline, as well as consistently strong capital flexibility and attention to enterprise risk management.”
A Moody’s spokesperson said, “The affirmation of ACE Bermuda Insurance Ltd.’s rating reflects its leadership position in large accounts professional liability, excess liability and political risk insurance as well as strong operating returns on average. These strengths are balanced against business line characteristics that pose unique challenges for pricing and reserving, specifically long claim settlement periods and low frequency/high severity nature of losses. The affirmation of ACE Tempest Reinsurance Ltd. [Bermuda]‘s rating reflects its reputation as a strong underwriting company in the reinsurance market and consistent track record of being amongst the most profitable reinsurers. Moody’s views both companies as being very well capitalized.
“The affirmation of ACE USA’s ratings reflect the group’s firmly established presence in commercial and specialty insurance [through ACE American and affiliates] and excess and surplus lines [through Westchester] in the US property and casualty insurance market, as well as its leadership in the agricultural insurance sector through its Rain and Hail operations. The rating agency noted that weakened calendar year underwriting margins over the past several years, in part reflecting elevated claim losses in 2012 associated with Superstorm Sandy and Midwestern droughts, have lead to weakened returns on capital for the group. However, ongoing rate level improvement excluding catastrophe losses should support internal capital generation.”
