S&P’s has assigned its “BBB-” preferred stock rating to Ace Ltd.’s $500 million ($575 million if over-allotment exercised) 7.80 percent cumulative redeemable preferred shares, Series C offering. Ace may redeem these shares any time after May 30, 2008. S&P’s also said that it affirmed its “BBB+” counterparty credit and senior debt ratings on Ace. In addition, S&P’s affirmed its “A+” counterparty credit and financial strength ratings on the insurance operations that make up the Ace Group. The outlook on all these companies is negative.
Several Ace Group entities will use the proceeds from the offering to reinforce their capital structures, which were weakened because of Ace’s fourth-quarter 2002 $2.18 billion gross ($516 million net; $354 million after-tax) asbestos charge and the pervasive impact it had on the Ace organization as a whole.
The negative outlook reflects S&P’s belief that Ace’s financial leverage will remain at about 20 percent and that its capital adequacy ratio will remain at least 145 percent. Conversely, Ace’s near-term earnings potential and financial strength will continue to be burdened by capital-management pressures, sizeable goodwill, and material exposure to credit risk.
To submit information for this department, e-mail: sjones@insurancejournal.com
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