A.M. Best Assigns "a-" to FELINE PRIDES, Issued by ACE Limited.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--April 11, 2000 A.M. Best Co. has assigned an "a-" rating to $300 million of FELINE PRIDES issued by ACE Limited. The sale of these cumulative redeemable preferred securities represents a drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: from ACE's existing shelf registration. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). will be used to repay a portion of ACE's outstanding commercial paper incurred in the acquisition of CIGNA's property/casualty operations (renamed ACE INA Ina (ē`nä), city (1990 pop. 60,062), Nagano prefecture, central Honshu, Japan, on the Tenryu River. It is an agricultural and industrial center with a famous agricultural school. ) for $3.5 billion in July 1999. A.M. Best believes the organization's fundamental rating factors remain essentially unchanged; therefore, ACE's existing debt and financial strength ratings remain unaffected. A.M. Best believes ACE maintains a strengthened global market profile due to the addition of CIGNA's property/casualty business. (See previous press releases dated March 31, 2000; Dec. 16, 1999; and Aug. 18, 1999.) The combined organization's overall profitability will improve as a result of management's restructuring initiatives, focusing primarily on ACE INA's operations. These initiatives include the realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of profit centers, enhanced claims methods and processing, and reductions in office sites and staff. In addition, the company is reevaluating the potential sale of certain underperforming units, including the recent sale of its middle market book of business that was reporting high loss ratios. ACE maintains strong interest and fixed-charge coverage fixed-charge coverage The number of times that a firm's operating income exceeds its fixed payments. Fixed-charge coverage is a measure of a firm's ability to meet contractually fixed payments, with high coverage indicating significant flexibility for making that continues to be well supported by historically excellent financial results. These strengths are somewhat offset by the additional leverage required to finance the CIGNA CIGNA CG (Connecticut General Life Insurance Company) INA (Insurance Company of North America) property/casualty acquisition and the material amount of goodwill created as a result of the purchase that could potentially diminish the organization's tangible net worth Tangible Net Worth Total assets less intangible assets and total liabilities. Notes: In terms of a consumer, tangible net worth is the sum of all your tangible assets (cash, home, cars, etc). . Although the integration of CIGNA's business into the overall organization continues to progress, A.M. Best believes that ACE's profitability could be negatively affected by unforeseen losses in Brandywine Group's run-off operations over the long term. However, the establishment of a reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. agreement with Berkshire Hathaway's National Indemnity unit, providing for $1.25 billion of unfavorable claims development above carried reserves prior to the acquisition, mitigates some of this risk. ACE Limited, headquartered in Hamilton, Bermuda, is a publicly traded holding company that, through its operating subsidiaries, provides a broad range of specialty insurance and reinsurance products to a diverse group of international clients. Operations are conducted worldwide, including the United States, Bermuda, London, continental Europe and Asia. The company is among the largest insurance organizations in the world, with reported consolidated assets of $30.1 billion and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $4.5 billion as of Dec. 31, 1999. The following new debt security rating was assigned: ACE Limited--"a-" rating on FELINE PRIDES The following debt ratings remain unaffected: - ACE INA Holdings Inc.--"a-" rating on new trust preferred security backed by junior subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". that is guaranteed by ACE Ltd. - ACE INA Holdings Inc.--"a-" rating on new capital securities backed by junior subordinated debt that is guaranteed by ACE Ltd. - ACE INA Holdings Inc.--"a" rating on new senior debt, guaranteed by ACE Ltd., issued under three separate tranches as follows: - $400 million, 8.2% due 8/15/2004 - $300 million, 8.3% due 8/15/2006 - $100 million, 8.875% due 8/15/2029 The ratings of the following securities available under shelf registration remain unaffected: - ACE Limited--"a" rating on senior debt; "a-" rating on subordinated debt; "a-" rating on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . - ACE INA Holdings Inc.-- "a" rating on senior debt; "a-" rating on the subordinated debt. - ACE Capital Trust I, II, and III-- "a-" rating on trust preferred securities. The financial strength ratings for the ACE group of companies, which includes ACE INA, remain unaffected. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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