(The following statement was released by the rating agency)
Oct 5 - Standard & Poor's Ratings Services said today that it has assignedits 'BBB' senior debt rating to Lancashire Holdings Ltd.'s
$130 million5.70% fixed-interest senior notes due 2022. The company intends to use the netproceeds for general corporate purposes, including supporting potentialopportunities in the underwriting operations of its subsidiaries, repayment ofindebtedness, or financing capital-management strategies such as the repurchaseof common shares pursuant to its share-repurchase program or the payment ofdividends.
Including this new issuance, Lancashire's pro-forma financial leverage as ofJune 30, 2012, was near 15% and its last-12-months interest coverage was about10x. We expect Lancashire's financial leverage to remain less than 20% andinterest coverage more than 5x for the near term.
The company met our expectations through the first half of 2012. Lancashire'sfirst-half 2012 gross premiums written increased by 35.5% to $515 million asthe company expanded its global property segment, particularly in propertyretrocession and catastrophe excess of loss. A significant portion of theincrease in property retrocession was ceded to the Accordion sidecar, whichwas launched in May 2011. Despite development of $24.6 million on the CostaConcordia marine loss in second-quarter 2012, Lancashire's underwritingperformance improved modestly through June 30, 2012, with a combined ratio of69.2%, compared with 73.7% in the first half of 2011 (including equity-basedcompensation as an expense). Net income as of June 30, 2012, rose to $103.7million from $97.5 million in the first half of 2011.
RELATED RESEARCHHolding Company Analysis, June 11, 2009RATINGS LISTLancashire Holdings Ltd.Issuer Credit Rating BBB/Stable/--NEW RATINGLancashire Holdings Ltd.$130 mil sr notes due 2022 BBB
(Caryn Trokie, New York Ratings Unit)