Fitch Rates RenaissanceRe's $300MM Preferred Issue 'BBB'; Outlook to Stable.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed its existing ratings on RenaissanceRe Holdings Ltd. (RNR RNR Rock 'N Roll RNR Royal Naval Reserve RNR Ribonucleotide Reductase RNR Receive Not Ready (ITU-T; ISDN) RNR Research News Reporter RNR Rest and Relaxation RNR Registry of Nursing Research RNR Rest and Recreation ) and has assigned a 'BBB' rating to RNR's new $300 million Series D Preferred Share issue. The Rating Outlook has been revised to Stable from Negative. Fitch's rating on RNR's new preferred issue is equivalent to its ratings on RNR's currently outstanding preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. . The agency anticipates that proceeds from the issue will be used to redeem RNR's 8.10% Series A Preferred Shares and 8.54% Capital Securities. At Sept. 30, 2006, in aggregate, there were $253 million of these securities outstanding. The rating reflects RNR's leading position in the property/catastrophe 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. market, consistently better than peer underwriting results, and reasonable use of financial leverage. The ratings also consider the inherently volatile nature of RNR's chosen business lines. Like most property/casualty reinsurers, RNR reported strong earnings through the first nine months of 2006 as the company benefited from favorable market conditions and comparatively low catastrophe-related losses. RNR reported $561 million of net income and a combined ratio of 55.2% through the Sept. 30, 2006. The revision in Fitch's Rating Outlook reflects Fitch's heightened comfort with RNR's ability to continue to deliver strong earnings and to retain its leading position in the catastrophe reinsurance market after the company incurred significant senior management changes in late 2005. The revision also reflects Fitch's belief that Securities and Exchange Commission (SEC) investigation that RNR faced in 2005 and for which the company submitted a settlement offer earlier this year, are unlikely to have a material financial or operational effect on RNR going forward. Fitch has assigned RNR's perpetual cumulative Series D Preferred Shares, a Class D designation under the agency's equity-credit criteria. Hybrid securities Hybrid Security A security that combines two or more different financial instruments. Notes: Hybrid securities generally combine both debt and equity characteristics. designated as Class D securities receive 75% equity credit under Fitch's criteria. Fitch notes that after the issue, roughly 15% of RNR's total capital will consist of hybrid securities. Under Fitch's equity-credit criteria, hybrid securities that may receive equity credit treatment are limited to 30% of capital. Key features supporting the shares' equity credit designation include their junior subordinated ranking and perpetual nature. RNR has the option to redeem the Series D preferred shares beginning in 2011. The shares' dividend is not subject to a step-up provision if the company elects to exercise this option. Thus, Fitch does not view the call option as having a limiting effect on the shares' equity-credit designation. The following ratings have been affirmed with a Stable Rating Outlook: Renaissance Reinsurance, Ltd.: --Insurer financial strength 'A'. RenaissanceRe Holdings, Ltd. --Long-term Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'A-'; --7.00% senior notes due 2008 'BBB+; --5.875% senior notes due 2013 'BBB+'; --8.10% Series A 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. 'BBB'; --7.30% Series B preferred stock 'BBB'; --6.08% Series C preferred stock 'BBB'. RenaissanceRe Capital Trust --8.54% capital securities due 2027 'BBB' The following rating has been assigned with a Stable Rating Outlook: RenaissanceRe Holdings, Ltd. --Series D Cumulative Preferred Stock Cumulative preferred stock Preferred stock whose dividends accrue, should the issuer not make timely dividend payments. Related: Non-cumulative preferred stock. 'BBB' Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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