ACE Ltd.'s A+ -Superior- Rating Remains Under Review Following Announcement of Plan to Acquire Capital Re.OLDWICK, N.J.--(BUSINESS WIRE)--May 27, 1999-- A.M. Best Co.'s A+ (Superior) rating on ACE Ltd. remains under review with developing implications following ACE's announcement that it intends to acquire Capital Re Corporation Inc. in a stock-for-stock transaction valued at roughly $600 million. The acquisition does not affect ACE's current rating, as ACE can comfortably finance the transaction with its strong stock currency. Further, the acquisition is consistent with ACE's diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. strategies and extends its existing $75 million minority investment stake in Capital Re. Finally, Capital Re--a specialty reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. that focuses largely on the financial guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. arena--is expected to contribute strong earnings, has a strong underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. track record, and offers a broad array of specialty products and services. Capital Re is expected to maintain its operating autonomy. The transaction is subject to customary regulatory approvals and is expected to close by the third quarter of 1999. ACE's rating was placed under review Jan. 12, 1999, as a result of its pending $3.5 billion acquisition of Cigna's domestic and international property/casualty operations. The Cigna transaction is expected to close in July July: see month. 1999, and A.M. Best plans to meet with management in June to review business integration plans, financial projections, permanent financing Permanent financing Long-term financing using either debt or equity. permanent financing The long-term financing that supports a long-term asset. arrangements and ACE's capital structure. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion