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A.M. Best has changed its mind about Ironshore, removing the Bermuda-based specialty insurer from its status as “under review with negative implications.”

A year after initially taking action, the ratings agency has affirmed the financial strength ratings of “A” (Excellent) and issuer credited ratings of “a” for Ironshore and its affiliate. Also, Ironshore Inc. (Cayman Islands) is no longer under review with negative implications, and its issuer credit rating of “bbb” has been affirmed.

At the same time, A.M. Best assigned a negative outlook to each of its ratings for Ironshore.

In July 2015, A.M. Best initially placed Ironshore under review with negative implications due to the planned (and now realized) $1.84 billion acquisition of Ironshore by China’s Fosun International. Fosun’s purchase covered the rest of Ironshore it didn’t already own, and A.M. Best said it was worried about Fosun’s credit profile and financial leverage and how it would affect the insurer.

A.M. Best said the affirmation of A.M. Best’s ratings nearly a year later reflects its view “that Ironshore has strong standalone attributes as a specialty insurer, will continue to build a relevant franchise in the specialty sector and is capable of delivering strong operating results.”

A negative outlook will hang over Ironshore for the foreseeable future, however, due to “the drag related to the credit profile and high debt leverage measures” Fosun has, A.M. Best said.

Still, A.M. Best noted Fosun’s recent announcement that it has applied for a U.S. IPO offering for Ironshore. Specifically, Fosun is seeking approval from the Hong Kong stock exchange for a proposed spin-off and separate listing of Ironshore on either the New York Stock Exchange or NASDAQ. A.M. Best said it sees this as a strategy to insulate Ironshore from issues its parent may face due to its “vulnerable credit profile and aggressive acquisition activity.”

With that in mind, A.M. Best said the IPO “will enhance the previous actions Ironshore has already taken to strengthen its corporate governance structure.”

Ironshore first disclosed plans for a possible IPO in March.

Meanwhile, U.S. authorities are reviewing Fosun’s acquisition of Ironshore, which closed in November 2015.

Source: A.M. Best

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Topics AM Best