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I AGREE
27 Sep 2011
New York, September 27, 2011 -- Moody's Investors Service has affirmed the Baa2 senior debt rating of
XL Group Ltd. and the A2 insurance financial strength ratings of
its operating subsidiaries. Moody's has also assigned provisional
ratings to XL Group Ltd. (provisional senior debt at (P)Baa2),
a wholly-owned subsidiary of XL Group plc (NYSE: XL --
not rated) and debt issuer under an existing multi-seniority shelf
registration statement that was filed by XL Group plc on November 28,
2008, and amended on July 1, 2010 and September 27,
2011.
The registration statement includes various classes of debt and preferred
stock issuable by XL Group plc and XL Group Ltd. (as well as ordinary
shares, warrants and share purchase contracts by XL Group plc).
Debt securities issued by XL Group Ltd. will carry a full and unconditional
guarantee from XL Group plc. No ratings were assigned to the provisional
debt and provisional preferred stock of XL Group plc.
Moody's also assigned a Baa2 rating to $400 million of ten
year senior notes to be issued by XL Group Ltd. The notes constitute
a drawdown on the shelf registration and are fully and unconditionally
guaranteed by XL Group plc on a senior unsecured basis. Proceeds
from the offering will be used as partial funding for the repayment at
maturity of the outstanding $600 million principal amount of senior
notes issued by XL Capital Finance (Europe) plc. The outlook for
the ratings is stable.
RATING RATIONALE
According to Moody's, XL Group's ratings reflect the
overall good market positions of the group's property and casualty
insurance and reinsurance operating units, as well as its diversified
earnings streams by geography and line of business. The ratings
also reflect the sound liquidity and capitalization of the company's
Bermuda operating subsidiaries, its moderating financial leverage,
as well as its solid core underwriting performance and moderate catastrophe
risk profile. These fundamental strengths are tempered by the intrinsic
volatility of XL's reinsurance businesses and certain insurance lines,
relatively moderate profitability, exposure to natural and man-made
catastrophes, and its moderate coverage of interest and preference
and ordinary share dividends.
The rating agency noted that XL Group continues to make progress in improving
its balance sheet and strengthening its core property & casualty insurance
and reinsurance operations. These efforts sustained a temporary
setback during the first half of 2011, as the company reported approximately
$456 million in year-to-date catastrophe losses,
leading to a slight net loss attributable to ordinary shareholders for
the first six months of 2011. That said, these catastrophe
losses, which equate to approximately 4.5% of XL Group's
YE2010 shareholders' equity, compare favorably against most
of its peers. Going forward, with pricing appearing to be
stabilizing across both commercial lines insurance and reinsurance,
we expect XL Group's core underwriting results to gradually improve,
though ultimate profitability may continue to face headwinds due to persistent
low investment yields.
The following provisional ratings have been assigned with a stable outlook:
XL Group Ltd. - provisional guaranteed senior unsecured
debt at (P)Baa2, provisional guaranteed subordinated debt at (P)Baa3.
The following ratings have been affirmed with a stable outlook:
XL Group Ltd. -- senior unsecured debt at Baa2, preferred
stock at Ba1(hyb);
XL Capital Finance (Europe) plc -- backed senior unsecured debt at
Baa2;
Stoneheath Re -- preferred stock at Ba1(hyb);
XL Insurance (Bermuda) Ltd -- insurance financial strength at A2;
XL Re Ltd -- insurance financial strength at A2;
XL Insurance Switzerland -- insurance financial strength at A2;
XL Insurance Company Limited -- insurance financial strength at A2;
XL Reinsurance America Inc . -- insurance financial strength
at A2;
Greenwich Insurance Company -- insurance financial strength at A2;
Indian Harbor Insurance Company -- insurance financial strength at
A2;
XL Specialty Insurance Company -- insurance financial strength at
A2; and
XL Insurance Company of New York, Inc. -- insurance
financial strength at A2.
XL Group plc, domiciled in Ireland with executive offices in Bermuda,
is a leading provider of insurance and reinsurance coverages through its
operating subsidiaries to industrial, commercial and professional
service firms, insurance companies and other enterprises on a worldwide
basis. As of June 30, 2011, XL Group plc reported total
cash and invested assets of $36.1 billion and shareholders'
equity of $10.6 billion.
The last rating action on XL Group occurred on December 23, 2009,
when Moody's affirmed the debt and insurance financial strength ratings
of XL Group Ltd. and its subsidiaries with the outlook changed
to stable from negative.
The principal methodology used in this rating was Moody's Global Rating
Methodology for Reinsurers published in July 2008.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare the rating are the following :
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not an auditor
and cannot in every instance independently verify or validate information
received in the rating process.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com for further information on the meaning
of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
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Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
James Eck
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Stanislas Rouyer
Senior Vice President
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's affirms XL Group's ratings (Senior at Baa2); Rates multi-seniority shelf registration and issuance of senior notes; Outlook is stable
No Related Data.
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