Moody’s Upgrades AmWINS Ratings

Moody’s Investors Service has upgraded the corporate family rating of wholesale broker AmWINS Group Inc. to B1 from B2 based on the company’s strong credit metrics, including a reduction in financial leverage in recent years.

The rating agency also upgraded AmWINS’ first-lien credit facility ratings to Ba3 from B1 and its senior unsecured note rating to B3 from Caa1. Moody’s has changed AmWINS’ rating outlook to stable from positive.

Headquartered in Charlotte, North Carolina, AmWINS is a leading wholesale distributor of specialty insurance products and services. The company generated revenues of $1.2 billion for the 12 months through June 2019.

Moody’s said the upgrade of AmWINS’ ratings reflects its market position as the largest U.S. property/casualty wholesale broker; its diversification across clients, retail producers, insurance carriers and product lines; and its healthy EBITDA margins.

Moody’s said the company has “achieved solid organic growth and consistent profitability supported by effective technology investments, high employee retention and an opportunistic acquisition strategy.” These strengths, according to Moody’s, are offset by the company’s significant debt burden, integration risk associated with acquisitions, and potential liabilities arising from errors and omissions, a risk inherent in professional services.

According to the rating analysts, AmWINS has demonstrated its ability to reduce financial leverage through earnings and free cash flow, and is now managing its leverage in a range consistent with a B1 corporate family rating. The rating agency estimates that AmWINS’ debt-to-EBITDA ratio is below 5x, while interest coverage is above 3x, and the free-cash-flow-to-debt ratio is in the mid-to-high-single digits. Moody’s expects that AmWINS will generally operate with leverage around 5x, albeit with occasional borrowings that push the metric toward 6x, followed by several quarters of leverage reduction.