A.M. Best Places Credit Ratings of Allied World Assurance Company, AG and Its Subsidiaries Under Review With Negative Implications
December 20, 2016 at 17:03 PM EST
A.M. Best has placed under review with negative implications the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Allied World Assurance Company, Ltd. and its operating subsidiaries. Additionally, A.M. Best has placed under review with negative implications the Long-Term ICRs of “bbb+” of Allied World Assurance Company Holdings, AG (Allied World) (Switzerland) [NYSE:AWH] and Allied World Assurance Company Holdings, Ltd. Lastly, A.M. Best has placed under review with negative implications the Long-Term Issue Credit Rating (Long-Term IR) of “bbb+” of Allied World Assurance Company Holdings, Ltd, which is guaranteed by Allied World. All companies are domiciled in Bermuda unless other specified. (See below for a detailed list of the operating subsidiaries.)
The under review status follows the announcement that Fairfax Financial Holdings Limited (Fairfax) and Allied World have entered into a merger agreement under which Fairfax will acquire all outstanding registered ordinary shares of Allied World. Under the terms of the agreement, Allied World shareholders will receive a combination of Fairfax subordinate voting shares and cash equal to $54 per Allied World share, for a total equity value of USD 4.9 billion. The transaction has been unanimously approved by each company’s board of directors. The under review with negative implications status reflects the execution risks associated with the transaction and the variation between Fairfax’s and Allied World’s Credit Ratings (ratings). This status also reflects the risks to Allied World’s ratings should the transaction not close as planned. The closing is expected to take place during the first half of 2017, and is subject to regulatory and shareholder approvals and other customary closing conditions.
A.M. Best will continue to monitor the progress and ongoing performance of both Fairfax and Allied World and evaluate developments and implications for any impact on the ratings.
The ratings were placed under review with negative implications for the following operating companies of Allied World Assurance Company Ltd. (Bermuda):
The following Long-Term IRs have been placed under review with negative implications for Allied World Assurance Company Holdings, Ltd:
-- “bbb+” on $300 million 5.5% senior unsecured notes, due 2020
-- “bbb+ on $500 million 4.35% senior unsecured notes, due 2025 (all notes are unconditionally and irrevocably guaranteed by AWH)
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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