Fitch Ratings has downgraded its ‘BBB-‘ insurer financial strength rating on Republic Western Insurance Co. (Republic Western) to ‘BB+’. The rating action solely reflects Fitch’s lowering of AMERCO’s senior unsecured debt and preferred stock ratings to ‘B+’ and ‘B-‘ from ‘BB+’ and ‘BB-‘, respectively.
Fitch’s rating action on AMERCO reflects the heightened level of event risk as the company seeks alternative sources of funds following its decision to withdraw its proposed $275 million unsecured debt transaction amid limited appetite for funding from traditional unsecured sources.
AMERCO’s ratings remain on Rating Watch Negative reflecting the resolution of the company’s covenant violation under its bank facility. Republic Western’s rating also remains on Rating Watch Negative, reflecting the possibility of additional rating actions on AMERCO. Given Republic Western’s role in the overall AMERCO organization, changes in the financial position of AMERCO can have an indirect material effect on Republic Western’s financial strength and credit quality.