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CHICAGO - Fitch Ratings on Monday put its ratings of Flagstone Reinsurance Holdings Ltd. on negative watch, citing the company's offer to buy competitor IPC Holdings Ltd.
The watch applied to Flagstone and all of its subsidiaries.
In a note to investors, analyst Mark Rouck Fitch said Fitch's decision reflects uncertainty about how joining the companies would affect the risk profile and capitalization of the newly formed entity.
Flagstone, based in Bermuda, offered last week to acquire all of IPC's outstanding shares in a stock and cash deal valued at $1.8 billion.
From a competitive positioning standpoint, Fitch noted Flagstone would benefit from the combined entity's enhanced size and scale. Rouck noted he would likely affirm Flagstone's ratings upon gaining comfort with the combined entities' risk-adjusted capitalization.
Fitch noted IPC has received competing bids from other entities. Fitch would remove the ratings from rating watch if IPC were to reject the offer.
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