S&P, Best Rate Beazley’s Holding Co.

Standard & Poor’s Ratings Services announced that it has assigned its ‘BBB+’ long-term counterparty credit rating to Beazley PLC, the Jersey-domiciled and Irish-tax resident, ultimate holding company for the Beazley group. S&P also affirmed the ‘BBB+’ counterparty credit rating on Beazley Group Ltd. (formerly Beazley Group PLC); both with stable outlooks.

A.M. Best Co. assigned an issuer credit rating (ICR) of “bbb+” to Beazley Plc, and also affirmed the ICR of “bbb+” of Beazley Group Limited, and the debt ratings of “bbb” on the £150 million ($245 million) junior subordinated notes due 2026 (S&P rated the issue ‘BBB-’) and the $18 million junior subordinated notes due 2034 issued by Beazley Group Limited. The outlook for all ratings is stable.

In addition Best said its ratings on Lloyd’s Syndicates 2623 and 623 remain unchanged.

Both S&P and Best took their respective rating actions following Beazley’s financial restructuring. The Group is now incorporated in Jersey and tax resident in Ireland. The former ultimate parent company, Beazley Group Plc, has been delisted and renamed Beazley Group Limited, as a wholly owned subsidiary.

Best indicated that it “expects a new Ireland-based reinsurer, Beazley Re Ltd (a wholly owned subsidiary of Beazley), to enter into a reinsurance arrangement with Beazley Underwriting Limited (the group’s corporate member).”

S&P said its stable outlook on Beazley “reflects the stable outlook on its Lloyd’s Syndicate 0623/2623.” The ratings on both entities also reflect their position within the holding structure of the Beazley group. Beazley PLC’s principal source of earnings is derived from its participation on Beazley Furlonge, “which operates within the Lloyd’s insurance market.” S&P’s financial strength rating on Lloyd’s is A+/Stable.

“The rating primarily reflects key features of Beazley’s operating profile, including Syndicate 0623/2623′s strong earnings, and the group’s strong competitive position,” explained S&P credit analyst Matthew Day. These strengths are partially offset, however, by the greater exposure to long-tail risks than that of peers, and the constraints placed on the financial flexibility of the group due to the current capital market turbulence.

S&P added that Beazley’s capitalization “is expected to be maintained at the current strong level, and should not drop below a level that is at least supportive of the current rating. Fixed-charge coverage is expected to remain strong.

“The outlook would be revised to negative or the rating lowered in the event of adverse operating performance or a failure to maintain capital within the ‘A’ rating range.

“Positive rating action is unlikely over the rating horizon, although this could occur were the syndicate to substantially outperform the Lloyd’s Market, driven by the internal risk management, as well as an increase in capitalization.”

Sources: Standard & Poor’s – www.standardandpoors.com and A.M. Best – www.ambest.com