A.M. Best Co. announced that it has assigned an issuer credit rating of “bbb” to Assurant, Inc. (currently Fortis, Inc.), the U.S. holding company of the Benelux-based Fortis Group.
Fortis plans to sell 55 percent of its stake in its U.S. subsidiary through an initial public offering next month. The move is a first step in the total divestiture of Fortis’ U.S. insurance operations. Assurant will trade under the symbol AIZ on the NYSE.
Shortly following the IPO, Assurant intends to issue approximately $1 billion of senior debt securities. Best said its “issuer credit rating reflects Assurant’s established market presence in numerous specialty insurance markets through the following four businesses: Assurant Solutions (currently called Assurant Group) offering specialty property and consumer protection credit and warranty businesses, Assurant Health (currently Fortis Health) offering individual and small group health, Assurant Employee Benefits (currently Fortis Benefits) offering small group non-medical products including group dental, group disability and group life and Assurant Preneed (currently Fortis Family and American Memorial Life) offering pre-funded funeral insurance.”
The rating agency said it “believes these operations will be relatively unaffected by Fortis’ diminished ownership position. All of Assurant’s rated insurance subsidiaries have financial strength ratings of either ‘A’ (Excellent) or ‘A-‘ (Excellent). The group’s insurance entities should have little difficulty in servicing future projected debt obligations.”
“While Assurant has considerable diversity in its revenue streams and profit sources, a number of its business units and product lines have been challenged by the slow economy and low interest rate environment of the past few years,” Best concluded, adding that its “rating does not give any credit for Fortis’ ownership.”
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