NU Online News Service, June 7, 11:26 a.m. EDT
A.M. Best Co. has placed the ratings of Intact Insurance Group and AXA Assurances Inc.–the Quebec-based subsidiary of Paris-based AXA Group–under review following the announcement that Intact will acquire AXA Canada Inc.
AXA Canada includes AXA Assurances and other Canada-based subsidiaries.
Oldwick, N.J.-based Best says the ratings review for AXA Assurances has "developing implications," while the review for Intact has "negative implications."
For Intact, Best says the negative implications reflect the company's "increased financial leverage position under the proposed financing structure" of the acquisition. "In addition," Best says, "there is potentially a considerable amount of execution risk associated with the integration of approximately $2 billion of AXA's direct premiums written into the [Intact] organization, which has approximately $4.5 billion of direct premiums written within the Intact Group."
Upon news of the merger announcement, rating agency Moody's Investors Service cited similar concerns and placed Intact's ratings under review for possible downgrade. Alan Murray, senior credit officer at Moody's said at the time that the proposed funding structure of the transaction will decreased Intact's financial flexibility.
Regarding AXA Assurances, Best says the under-review status with developing implications reflects "uncertainty with respect to the potential impact on the ratings, particularly as it pertains to the integration of the entities and business into [Intact] and the related execution risk associated with the transaction."
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