Ironshore deal will boost Liberty Mutual in strategic markets, say rating agencies

The rating agencies have started to react to the news that Liberty Mutual will acquire Ironshore – just over a year after Fosun International, China’s biggest conglomerate, acquired the remaining 80 percent stake in the Bermuda-based property/casualty insurer.

Liberty Mutual will acquire a 100 percent ownership interest in Ironshore via a stock purchase agreement believed to be worth around $3 billion pending closing price adjustments.

S&P Global Ratings has affirmed its 'BBB' long-term counterparty credit rating on Liberty Mutual following the announcement of its intent to acquire Ironshore. The outlook is stable.

S&P said the deal could boost the market position of Liberty Mutual in certain strategic markets.

“We recognise that Ironshore could elevate Liberty Mutual's presence in the US excess-and-surplus-lines market, and the acquisition is consistent with the group's long-term strategy to increase its specialty bandwidth. We expect Ironshore's management team to remain intact with minimal defections and moderate expense savings,” said S&P Global Ratings credit analyst Tracy Dolin.

Meanwhile, AM Best has said that the credit ratings of Liberty Mutual and its subsidiaries remain unchanged following the announcement.

It said that the modest size of the transaction, along with Ironshore’s historical profitability, limits any execution and integration risks associated with the pending acquisition. The proposed transaction will also not be subject to any financing conditions.

“In addition to an established management team, with a successful track record within specialty lines, the deal provides Liberty Mutual’s specialty lines operations with enhanced scale, diversification, distribution and capabilities. Liberty Mutual has been focusing on growing its specialty lines operations and capabilities and this transaction helps to accelerate those aspirations,” AM Best said.