Best Places Brit’s Ratings Under Review with Negative Implications

A.M. Best Europe – Rating Services Limited has placed the financial strength rating of ‘A’ (Excellent) and issuer credit rating (ICR) of “a” of the UK’s Brit Insurance Limited (BIL) and the ICR of “bbb” of Netherlands-based Brit Insurance Holdings N.V. , the ultimate parent of the Brit Insurance group of companies, under review with negative implications.

Best also placed the debt rating of “bbb-” on the £135 million [$214 million] fixed rate subordinated notes, issued and guaranteed by the intermediate holding company of BIL, Brit Insurance Holdings Ltd, and now an obligation of Brit Insurance under review with negative implications.

Best took the rating actions following the announcement of a recommended cash offer by Achilles Netherlands Holding B.V. (Achilles) to acquire the Brit Insurance group companies. Achilles is a newly incorporated company formed on behalf of, and which will be majority owned by, funds managed by Apollo Management VII, L.P. and funds advised by CVC Capital Partners Limited.

The under review status of the ratings was triggered by “uncertainties surrounding the post-acquisition capital structure of Brit Insurance,” Best explained. The rating agency added that it believes that there is “potential for Achilles to establish a strategy of maintaining lower risk-adjusted capitalization than previously anticipated.”

Best said it “aims to resolve the under review status upon completion of the transaction, which is expected in the first quarter of 2011.”

Source: A.M. Best