A.M. Best, Fitch Ratings, S&P Global Ratings and Moody's took ratings actions on AXA, XL Group Ltd. and/or their respective subsidiaries after the announcement that AXA will acquire XL Group for a total cash consideration of $15.3 billion.
A.M. Best placed under review with developing implications the financial strength ratings of A (Excellent) and the long-term issuer credit ratings of "a+" of XL Group subsidiaries XL Bermuda Ltd., Catlin Indemnity Co., Catlin Insurance Co. (UK) Ltd., Catlin Insurance Co. Ltd., Catlin Insurance Co. Inc., Catlin Reinsurance Switzerland Ltd., Catlin Specialty Insurance Co., Greenwich Insurance Co., Indian Harbor Insurance Co., XL Insurance America Inc., XL Insurance Co. SE, XL Insurance Co. of New York Inc., XL Insurance Switzerland Ltd., XL Re Europe SE, XL Reinsurance America Inc., XL Seguros México SA de CV, XL Select Insurance Co. and XL Specialty Insurance Co.
The rating agency also placed under review with developing implications the long-term issuer credit rating of "bbb+" of XL Group and XLIT Ltd.
Additionally, A.M. Best placed under review with developing implications the financial strength rating of B++ (Good) and the long-term issuer credit rating of "bbb+" of XL Life Ltd., the financial strength rating of A (Excellent) and the long-term issuer credit rating of "a+" of Lloyd's Syndicate 2003, and the financial strength rating of A- (Excellent) and the long-term issuer credit rating of "a-" of T.H.E. Insurance Co.
Fitch put on Rating Watch Positive the A- issuer default rating of XLIT and the A+ insurer financial strength ratings of XL Bermuda, XL Insurance Switzerland, XL Insurance Co. SE, XL Insurance America, XL Reinsurance America, XL Re Europe SE, XL Insurance Co. of New York, XL Specialty Insurance, Indian Harbor Insurance, Greenwich Insurance Co. and XL Select Insurance.
The Positive Watch reflects the rating agency's assumption that if the transaction closes with the proposed terms, the ratings will likely be aligned to AXA's ratings, with XL Group expected to be viewed as either a "very important" or "core" subsidiary.
S&P affirmed its ratings on XLIT and its insurance and reinsurance subsidiaries.
The outlook is stable, reflecting the rating agency's view that XL Group's stand-alone characteristics will likely remain the same after the acquisition, anchored by the very strong competitive position and very strong capitalization.
Moody's placed on review for upgrade the A2 insurance financial strength ratings of XL Group's principal operating subsidiaries, XL Bermuda, XL Insurance Co. of New York, XL Insurance Co. SE, XL Insurance Switzerland, XL Reinsurance America, XL Specialty Insurance, Greenwich Insurance and Indian Harbor Insurance.
The review for upgrade will focus on the degree of support provided by AXA after the deal closes. The rating agency will also consider for the review any significant changes to XL Group's risk appetite related to investments, catastrophe exposure and operational and financial leverage post-integration.
Fitch placed on Rating Watch Negative AXA's A long-term issuer default rating and F1 short-term issuer default rating. The rating agency also put under Rating Watch Negative the AA- insurer financial strength ratings of AXA Art Versicherung AG, AXA ART Insurance SE, AXA France IARD S.A., AXA France Vie SA, AXA Corporate Solutions Assurance, AXA Insurance Co., AXA Life Ltd., AXA Belgium SA, AXA Global Re, AXA Versicherung AG, AXA Lebensversicherung AG, AXA Krankenversicherung AG, DBV Deutsche Beamtenversicherung AG, Deutsche Arzteversicherung Aktiengesellschaft, AXA Insurance UK Plc, AXA PPP Healthcare Ltd., AXA Insurance Pte Ltd., AXA General Insurance Hong Kong Ltd. and AXA China Region Insurance Co. (Bermuda) Ltd.
AXA Versicherung's A+ long-term issuer default rating was also placed on Rating Watch Negative.
The Rating Watch Negative reflects the rating agency's view that execution risks related to the planned IPO of AXA's U.S. life operations could a have a negative impact on AXA's credit profile in relation to the planned acquisition of XL Group.
S&P placed on CreditWatch with negative implications its AA- long-term issuer credit and insurer financial strength ratings on the entities viewed as core or highly strategic to AXA.
The CreditWatch placement reflects S&P's view that the transaction, if completed, could materially weaken AXA's capital adequacy if it fails to successfully deconsolidate its U.S. life and asset management operations in the coming years.
Moody's affirmed the Aa3 insurance financial strength ratings of AXA's main operating subsidiaries, AXA France IARD, AXA France Vie, AXA Belgium, AXA Krankenversicherung, AXA Lebensversicherung, AXA Versicherung, AXA Insurance UK, AXA Insurance DAC, AXA Versicherungen and Guardian Royal Exchange Plc.
The ratings outlook has been changed to negative from stable, reflecting the impact of the deal's proposed financing and the significant increase in goodwill amount on AXA's balance sheet. The proposed financing will substantially increase AXA's financial leverage at least in the short term.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
