OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has removed from under review with developing
implications and upgraded the Financial Strength Rating (FSR) to A+
(Superior) from A (Excellent) and the Long-Term Issuer Credit Rating
(Long-Term ICR) to “aa-” from “a+” of the property/casualty subsidiaries
of XL Group Ltd (XL) (Bermuda). Concurrently, the Credit Ratings
(ratings) of AXA Insurance Company (New York, NY) have been aligned with
the entities of the XL group and, as such, have been removed from under
review with developing implications and its FSR upgraded to A+
(Superior) from A (Excellent) and its Long-Term ICR to “aa-” from “a+”.
In addition, AM Best has removed from under review with developing
implications and upgraded the Long-Term ICR to “a-” from “bbb+” and the
Long-Term Issue Credit Ratings (Long-Term IR) of XLIT Ltd. (Cayman
Islands). AM Best also has removed from under review with developing
implications and upgraded the Long-Term ICR to “a-” from “bbb+” of XL.
Additionally, AM Best has removed from under review with developing
implications and upgraded to “a-” from “bbb+” the Long-Term IR of the
preference share issues of Catlin Insurance Company Ltd. (Bermuda). The
outlooks assigned to these ratings is stable (See below for a detailed
listing of the companies and ratings).
AM Best also has removed from under review with developing implications
and affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” of XL
Life Ltd (Bermuda). The outlook assigned to these ratings is stable.
In addition, AM Best has removed from under review with developing
implications and affirmed the FSR of A (Excellent) and the Long-Term ICR
of “a+” of Lloyd’s Syndicate 2003 (United Kingdom). The outlook assigned
to these ratings is stable. The syndicate’s ratings reflect Lloyd’s
financial strength, which underpins the security of all Lloyd’s
In addition, the FSR of A- (Excellent) and the Long-Term ICR of “a-” of
T.H.E. Insurance Company (New Orleans, LA) remain under review with
In March 2018, the ratings of XL were placed under review with
developing implications following AXA S.A.’s (AXA or the group)
announcement that it had entered into an agreement to acquire 100% of XL
for a cash consideration of USD 15.3 billion (EUR 12.4 billion). The
latest rating actions follow the completion of this transaction on Sept.
12, 2018, and the conclusion of AM Best’s assessment of its impact on
the credit fundamentals of the group and its rated subsidiaries. In AM
Best’s opinion, the execution risk associated with the acquisition has
been partially alleviated, as completion of the transaction and
integration to date has been in line with expectations. Furthermore,
although the transaction has resulted in an increase in financial
leverage for AXA, AM Best expects this situation to be temporary, as the
group has presented a clear plan to reduce leverage over the coming
years. AXA is expected to maintain a very strong balance sheet, strong
operating performance, although the XL business has the potential to
introduce some volatility, a very favorable business profile and very
strong enterprise risk management (ERM).
The ratings of XL reflect the organization’s balance sheet strength,
which AM Best categorizes as very strong, as well as its adequate
operating performance, favorable business profile and appropriate ERM.
The rating upgrades reflect XL’s strategic importance to, and strategic
alignment with, AXA, in enhancing the group’s position in the commercial
global property & casualty (P&C) insurance sector, with the company
receiving rating enhancement as a result. XL is considered
well-integrated within the AXA group, and AM Best expects that prompt
and sufficient operational and financial support will be made available
from the AXA group to XL should it be required.
XL’s risk-adjusted capitalization, as measured by Best’s Capital
Adequacy Ratio (BCAR), is categorized as strongest and AM Best expects
it to remain at a similar level in prospective years. Balance sheet
strength also considers the company’s good liquidity profile,
conservative investment strategy and disciplined reserving approach.
XL’s operating earnings have been somewhat volatile and marginally
adequate over the past five years (2013-2017), resulting in a five-year
average return on equity (ROE) of 4.4%. In 2017, natural catastrophe
losses amounting to approximately USD 2 billion, after reinsurance, led
to a negative annual ROE of -4.6%. Although XL recorded a combined ratio
of 95.5% as of June 30, 2018, AM Best expects these results to
deteriorate due to the company’s exposure to catastrophic events during
the second half of the year.
XL maintains a favorable business profile due to its extensive
distribution network, strong franchise and well-diversified book of
business by both product type and geography. In 2019, businesses from
AXA are anticipated to contribute approximately USD 3 billion in gross
written premiums to the new AXA XL division. The company continues to
operate in challenging competitive conditions that consistently drive
negative pressure on pricing. XL’s risk management capabilities are
viewed as appropriately aligned with its risk profile.
The FSRs have been removed from under review with developing
implications and upgraded to A+ (Superior) from A (Excellent), and the
Long-Term ICRs upgraded to “aa-” from “a+”, with stable outlooks
assigned for the following subsidiaries of XL Group Ltd:
- XL Bermuda Ltd
- AXA Insurance Company
- Catlin Indemnity Company
- XL Catlin Insurance Company UK Limited
- Catlin Insurance Company Ltd.
- Catlin Insurance Company, Inc.
- Catlin Re Switzerland Ltd
- Catlin Specialty Insurance Company
- Greenwich Insurance Company
- Indian Harbor Insurance Company
- XL Insurance America, Inc.
- XL Insurance Company SE
- XL Insurance Company of New York, Inc.
- XL Insurance Switzerland Ltd
- XL Re Europe SE
- XL Reinsurance America Inc.
- XL Seguros Mexico, S.A. de C.V.
- XL Select Insurance Company
- XL Specialty Insurance Company
The following Long-Term IRs have been removed from under review with
developing implications, upgraded and assigned stable outlooks:
— to “a-” from “bbb+” on $300 million 2.30% senior unsecured notes, due
— to “a-” from “bbb+” on $400 million 5.75% senior unsecured
notes, due 2021
— to “a-” from “bbb+” on $350 million 6.375%
senior unsecured notes, due 2024
— to “a-” from “bbb+” on $325
million 6.25% senior unsecured notes, due 2027
— to “a-” from
“bbb+” on $300 million 5.25% senior unsecured notes, due 2043
“bbb+” from “bbb” on $500 million 4.45% subordinated notes, due 2025
to “bbb+” from “bbb” on $500 million 5.5% subordinated notes, due 2045
to “bbb” from “bbb-” on $350 million Series D non-cumulative preferred
securities ($287 million outstanding)
— to “bbb” from “bbb-” on
$1,000 million Series E non-cumulative preferred securities ($670
The following indicative Long-Term IRs have been withdrawn at the
— “bbb+” on senior unsecured debt
— “bbb” on subordinated debt
“bbb-” on preferred stock
The following Long-Term IR has been removed from under review with
developing implications, upgraded and assigned with stable outlooks for
the following securities of Catlin Insurance Company Ltd.
— to “a-” from “bbb+” on $600 million non-cumulative preferred stock
($519 million outstanding)
This press release relates to Credit Ratings that have been published
on AM 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 AM 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. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
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unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
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