ACE Prices $450 Million Senior Notes; S&P Assigns ‘A-‘ Rating

ACE Limited announced that its subsidiary, ACE INA Holdings Inc., has agreed to sell $450 million of 5.60 percent Senior Notes due May 2015. The notes will be guaranteed by ACE Limited.

Ace said it would use the net proceeds from the sale of the senior notes to redeem preferred shares.

Standard & Poor’s Ratings Services has assigned its ‘A-‘ senior debt rating to the notes. It also rates ACE as ‘A-‘ with a stable outlook.

Credit analyst Damien Magarelli explained: “The rating on ACE reflects its operating insurance companies’ very strong collective competitive position as a global and diversified property/casualty group and their strong financial flexibility, strong capitalization, and strong operating performance.

“Negative factors are ACE’s changing and increasing risk profile into new lines and geographic locations and high reinsurance utilization in certain lines.” In addition, ACE has high amounts of recoverables, runoff reserves, and intangibles, though collectively, these risks are decreasing.

S&P indicated that it expects “ACE will grow in Asia-Pacific, Latin America, and China, in most cases focusing on personal accident, life, and specialty casualty products. The company has started life insurance operations in Vietnam, Taiwan, and China. ACE’s risk-management process should continue to evolve and improve the controls over its growing and expanding competitive risk profile.

“If ACE demonstrates that its risk management will evolve positively as prices soften and the risk profile continues to expand, a positive outlook might be possible in 2008. However, a positive outlook would need the support of a combined ratio near 92 percent (including any reserve charges), minimal asset impairments, and a very strong capital adequacy ratio, all while recoverable, intangible, and runoff reserve leverage continue to decrease.

“We could revise the outlook to negative if ACE experiences significant adverse reserve development, sizeable asset impairment charges, or a sizeable change in its competitive position or capitalization.”

Source: Standard & Poor’s – www.standardandpoors.com