OLDWICK, N.J.–(BUSINESS WIRE)–#insurance—AM Best has assigned a Long-Term Issue Credit Rating of “a-” (Excellent) to the recently issued CAD 400 million, 5.276% senior unsecured medium-term notes, due 2054, issued by Intact Financial Corporation (IFC) (Toronto, Ontario, Canada). The outlook assigned to this Credit Rating (rating) is stable. The Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of IFC’s operating subsidiaries and all other ratings of its outstanding issuances remain unchanged.
IFC intends to use the proceeds from the issuance to subscribe for shares of one or more the company’s subsidiaries and ultimately be used for the purpose of partially funding the acquisition of Direct Line Insurance Group plc’s brokered commercial lines operations. The purchase price includes an initial cash consideration of GBP 520 million (CAD 884 million), with potential for up to a further GBP 30 million (CAD 51 million) contingent payment under earnout provisions relating to the financial performance of the acquired business lines. The transaction will result in the transfer of renewal rights, brands, employees, and systems to RSA Insurance Group Limited.
IFC intends to use available cash resources, undertake further financings or draw on term loans to fulfill any shortfall if the proceeds from IFC’s debt offering are less than the initial purchase price of the acquisition.
Additionally, excess net proceeds are intended to be used for general corporate purposes. AM Best notes that leverage has increased slightly, but still remains within acceptable guidelines on an adjusted basis with strong interest coverage.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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