MOODY'S REVIEWS UNDERWRITERS RE FOR POSSIBLE UPGRADE; PENDING ACQUISITION BY SWISS RE CITED
Moody's Investors Service announced today that the ratings of Underwriters Re Group, Inc. have been placed on review for possible upgrade. The review is a result of the announcement that an agreement in principle has been reached for the company to be acquired by Swiss Re. The senior debt securities of Underwriters Re are currently rated Baa2. Underwriters Reinsurance Company, the company's principal operating subsidiary, currently carries a financial strength rating of A3, while financial strength ratings of Baa1 are assigned to its primary-writing operating subsidiaries. Underwriters Re is owned by New York city-based Allegheny Corporation (Baa2 counterparty rating), a diversified holding company with operations in investment management and industrial minerals in addition to reinsurance. Swiss Reinsurance Company is a leading global reinsurer that is rated Aaa for insurance financial strength.
Under the terms of the agreement, which was announced earlier today, Swiss Re would pay $725 million for the Underwriters Re Group (excluding the London-based Lloyds operations conducted by Underwriters Re Agencies Ltd.). The final amount will be subject to an adjustment based on the stockholders' equity of Underwriters Re at the time of the closing. With this transaction, Swiss Re will gain access to the broker market channel in reinsurance. Swiss Re America, Swiss Re's principle operating subsidiary in the U.S., currently writes business directly with its clients.
According to Moody's, the current ratings of Underwriters Re Group, Inc. reflect the company,s established position as a mid-sized broker reinsurer, as well as its disciplined underwriting approach, its positive earnings performance, and its overall sound financial fundamentals. These favorable considerations are attenuated by URG Holdings, financial leverage, significant single-issuer concentration in its equity securities portfolio, and business concentrations at the reinsurer, as well as by an intensified competitive environment in the international reinsurance marketplace. In its review of the ratings of Underwriters Re, Moody's will consider the degree of explicit and implicit support that will be afforded to the policyholders and bondholders of the company by its new owner.
Underwriters Re Group, Inc. is a subsidiary of Allegheny Corporation (Allegheny). Allegheny has operations in asset management, mining, and insurance. Underwriters Re Group, Inc. based in Calabasas, California is a property and casualty reinsurer with primary insurance operations which reported total assets of $3.4 billion and revenues of $594 million through the nine months ended September 30, 1999.
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