trending Market Intelligence /marketintelligence/en/news-insights/trending/WCuVRWGYMvHXfjxHSJ3mAg2 content esgSubNav
In This List

Insurance ratings actions: Moody's affirms PartnerRe units; S&P affirms Sedgwick

Blog

The Big Picture 2022 Insurance Industry Outlook

Podcast

Next in Tech | Episode 37: Insurance impacts on technology and vice versa

Case Study

A Prestigious Global Business School Gains a Competitive Edge

Video

S&P Capital IQ Pro | Unrivaled Sector Coverage


Insurance ratings actions: Moody's affirms PartnerRe units; S&P affirms Sedgwick

S&P Global Market Intelligence compiles ratings actions in the insurance space daily through 5:30 p.m. ET. Actions after 5:30 p.m. ET will be included in the following day's roundup.

Property and casualty

A.M. Best affirmed Petroleum Marketers Management Insurance Co.'s A- (excellent) financial strength rating and its "a-" long-term issuer credit rating, while revising the outlooks to positive from stable.

The rating agency said the company's balance sheet, operating performance, niche market focus and enterprise risk management were all contributing factors to the company's ratings. The revised outlook is an indication of the company's "consistent and strong operating performance and very strong balance sheet," A.M. Best said.

Petroleum Marketers' leadership team's "long experience" within the underground storage tank and above-ground storage tank pollution liability market were also a driving factor for the company's ratings, as well as its near-term "prudent business plans," the rating agency said.

A.M. Best added that the company's positive factors are offset by its narrowly focused business profile, as the majority of its business stems from Iowa.

______________________

Moody's affirmed the A1 insurance financial strength ratings of Partner Reinsurance Co. Ltd. and Partner Reinsurance Co. of the U.S.

The outlook on the ratings is stable.

The affirmation of the PartnerRe Ltd. units is an indication of the group's position in specialty reinsurance businesses, strong capitalization, core profitability, investment portfolio and reserving track record. The potential upsides in its ratings are counteracted by the group's possible earnings volatility as a result of property catastrophe reinsurance exposures and the amount of competition in the reinsurance space.

Still, Moody's said the company is "well positioned" to benefit from potential property reinsurance pricing increases of between 5% and 10% during the upcoming renewal season after it recorded a net income available to common shareholders through the first three quarters of 2017, despite a number of catastrophic events.

______________________

S&P Global Ratings affirmed the B long-term issuer credit rating of Sedgwick Inc. and Sedgwick Claims Management Services Inc., while also removing the ratings from CreditWatch with negative implications.

Just a week earlier, the rating agency put Sedgwick's issuer and issue credit ratings on CreditWatch negative after Sedgwick Claims Management Services agreed to acquire global loss adjuster Cunningham Lindsey U.S. Inc., a lower-rated entity by S&P.

The newly affirmed rating has a stable outlook, largely indicating S&P's expectation that Sedgwick could see mid-single-digit revenue growth as a result of client retention and new clients, along with "favorable" U.S. employment conditions. In 2018, Sedgwick could be recording revenues of about $2.7 billion, and in 2019 revenues could reach $2.8 billion, the rating agency said.

S&P said it is also unlikely to raise the rating in the next 12 months, but that it would consider an upgrade after that if the company is able to grow and diversify its operations, as well as improve its EBITDA margins.

The rating agency added that if the company's credit profile deteriorated in the next year, whether it be through competitive pressures, revenue losses or high operating costs, the company's ratings could be downgraded.

______________________

Moody's affirmed Sedgwick Claims Management Services' B3 corporate family rating and its B3-PD probability of default rating.

The outlook on the ratings is stable.

The affirmation reflects the company's diverse customer base, product lines and breadth across the U.S., as well as its "strong" organic revenue growth history, the rating agency said.

The potential deal for Cunningham Lindsey could be a credit positive for Sedgwick though, as it will allow the company an access point to international expertise and clients, Moody's said. Sedgwick and Cunningham Lindsey also could make a strong pairing given their products and service offerings, which together "will form a leading global provider of risk and benefit solutions," Moody's said.

But the still-pending acquisition's size is a point of concern as it is largely funded through debt. As a result, the rating agency expects Sedgwick's free cash flow to be hindered for the upcoming months.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.