A.M. Best Co. has assigned an indicative rating of “bbb+” to the forthcoming issue of dated fixed/floating rate subordinated notes and an indicative rating of “bbb” to the forthcoming issue of U.S. dollar-denominated non-cumulative perpetual preferred shares to be issued by Catlin Insurance Company Limited (CICL), a Bermuda-domiciled general insurer.
Best also noted that Catlin’s ratings have been and remain “under review with negative implications” since the announcement that it would purchase Wellington Underwriting Plc, a fellow Lloyd’s insurer which is also well established in the U.S. (See IJ web site Oct. 20, 2006, Dec. 19, 2006). CICL is a wholly owned subsidiary of Catlin Group Limited (CGL), the Group’s Bermuda-based holding company.
The rating agency said it “anticipates that the proceeds of these issues will be used to repay $500 million of bridging finance employed for the purchase of Wellington Underwriting Plc, to refinance senior debt and for general business purposes.
“Financial and debt leverage ratios are expected to remain within A.M. Best tolerance levels. Both issues are callable after 10 years and, if not called, the interest rate under the subordinated notes and the dividend under the preference shares will be stepped up by 100 basis points over the initial credit spread on a London inter-bank offer rate (LIBOR) basis, and the base rate will move from the fixed rate to floating three-month LIBOR.”
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