(The following statement was released by the rating agency)
Oct 5 - Standard & Poor's Ratings Services said today that it has assigned its 'BBB' senior debt rating to Lancashire Holdings Ltd.'s
$130 million 5.70% fixed-interest senior notes due 2022. The company intends to use the net proceeds for general corporate purposes, including supporting potential opportunities in the underwriting operations of its subsidiaries, repayment of indebtedness, or financing capital-management strategies such as the repurchase of common shares pursuant to its share-repurchase program or the payment of dividends.
Including this new issuance, Lancashire's pro-forma financial leverage as of June 30, 2012, was near 15% and its last-12-months interest coverage was about 10x. We expect Lancashire's financial leverage to remain less than 20% and interest coverage more than 5x for the near term.
The company met our expectations through the first half of 2012. Lancashire's first-half 2012 gross premiums written increased by 35.5% to $515 million as the company expanded its global property segment, particularly in property retrocession and catastrophe excess of loss. A significant portion of the increase in property retrocession was ceded to the Accordion sidecar, which was launched in May 2011. Despite development of $24.6 million on the Costa Concordia marine loss in second-quarter 2012, Lancashire's underwriting performance improved modestly through June 30, 2012, with a combined ratio of 69.2%, compared with 73.7% in the first half of 2011 (including equity-based compensation as an expense). Net income as of June 30, 2012, rose to $103.7 million from $97.5 million in the first half of 2011.
RELATED RESEARCH Holding Company Analysis, June 11, 2009 RATINGS LIST Lancashire Holdings Ltd. Issuer Credit Rating BBB/Stable/-- NEW RATING Lancashire Holdings Ltd. $130 mil sr notes due 2022 BBB
(Caryn Trokie, New York Ratings Unit)