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Moody’s might upgrade AXIS
Moody's Investors Service said it placed AXIS Capital Holdings Ltd.’s Baa3(hyb) preferred stock rating and the Baa1 senior debt ratings of the company and its financing subsidiaries on review for upgrade.
The agency also affirmed the A3 senior debt ratings of PartnerRe Ltd. and its financing subsidiaries and PartnerRe’s Baa2(hyb) preferred stock rating. The outlook is stable.
The rating actions are a result of the merger announcement between the companies. Following the amalgamation, PartnerRe shareholders will own 51.6% of the combined company and AXIS shareholders will own the remaining 48.4%.
Moody's believes that the combined group will likely have a credit profile consistent with an A3 senior debt rating. The agency said the merger will provide both franchises with strategic and financial benefits.
The review of AXIS for upgrade reflects an expected improvement in the business and financial profile of the company following the merger. In particular, the agency said AXIS will benefit from greater scale and product diversification in its reinsurance platform and gain access to PartnerRe's deeper and broader international presence.
Moody’s said the affirmation of PartnerRe's ratings with a stable outlook reflects the prospective strengthening of its business profile through the increased scale resulting from the transaction as well as improved product diversification by gaining access to AXIS' profitable specialty insurance platform.
In the agency’s view, these prospective improvements are offset somewhat by modestly weaker pro forma financial metrics resulting from the transaction, including higher levels of operating, catastrophe and financial leverage.
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