Fitch Upgrades XLIT Following Acquisition Close

September 13, 2018

Fitch Ratings has upgraded the ratings of XLIT Ltd. [XL, a Cayman Islands subsidiary of XL Group Ltd] and its property/casualty [re]insurance subsidiaries following the completion of the acquisition by AXA SA.

“This includes a one notch upgrade of XL’s core operating subsidiaries Insurer Financial Strength [IFS] rating to ‘AA-’, the Issuer Default Rating [IDR] to ‘A’ and senior unsecured debt ratings to ‘A-’.Fitch has also removed the ratings from Rating Watch Positive. A complete list of ratings is provided at the end of this release. The Rating Outlook is Stable,” Fitch said.

The ratings agency said, “The rating action follows the announcement that the acquisition of XL by French insurance and asset management company AXA SA [IDR A; operating subsidiaries IFS AA-/Stable] for a total value of approximately USD15.3 billion is complete.

On March 6, 2018, Fitch placed all of XL’s ratings on Rating Watch Positive following the original acquisition announcement. XL’s ratings are now equivalent to AXA’s as the organization is viewed by Fitch as a “Very Important” subsidiary per Fitch’s group rating methodology.

“AXA is a very strong, larger multi-line organization with a greater presence in U.S. commercial property/casualty insurance and global reinsurance markets following the XL purchase. AXA continues to be the largest insurer in Europe as measured by gross written premiums and has a strong presence in major insurance markets worldwide.

“As a ‘Very Important’ subsidiary of AXA, XL’s rating sensitivities are consistent with AXA’s sensitivities.

“The ratings could be downgraded if AXA’s financial leverage remains above 30% or fixed-charge coverage falls below 9x. The ratings could also be downgraded if consolidation of XL triggers meaningful charges or the Prism FBM score falls to ‘Strong’.

“An upgrade of the ratings is unlikely in the medium term given AXA’s high leverage, low coverage for its ratings, the degree of event risks associated with the integration of XL and potential further divestures of AXA Equitable Holdings.”

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