In addition to affirming W.R. Berkley’s overall ratings (see related article in National news), Standard & Poor’s Ratings Services also announced that it has assigned its preliminary ‘BBB+’ senior debt, ‘BBB’ subordinated debt, and ‘BBB-‘ preferred stock ratings to the company’s $750 million universal shelf registration, which became effective Dec. 23, 2003.
“The ratings reflect BER’s strong business position, including a well-diversified revenue profile, conservative investment portfolio that supports strong liquidity, and strong financial flexibility,” said S&P. “In addition, operating performance has significantly improved in 2002, and 2003 is expected to be another strong year.”
The bulletin noted, however, that “In contrast, BER’s capital adequacy is low for the rating, and thereby BER’s operating companies have less flexibility than their peers to withstand underwriting and investment uncertainties. In addition, BER has an aggressive corporate strategy that includes managing capital and holding company statistics to their rating limits, and this is expected to continue.
“The universal shelf is registered to offer in aggregate up to $750 million of debt securities, junior subordinated debt securities, preferred securities, and common shares,” the announcement continued. “BER’s financial flexibility is viewed as strong with debt leverage at 27 percent (35 percent including trust preferreds) and interest coverage at 6.5x (excluding realized capital gains) through September 2003.”
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