Plans for Ironshore Inc. to be fully absorbed by China’s Fosun International Ltd. in a $1.84 billion merger have caught the eye of A.M. Best, which is placing the Bermuda-based insurer under review with negative implications.

The ratings entity said that the financial strength rating of “A” and the issuer credit ratings of “a” for Ironshore and its affiliate are under review with negative implications. In addition, the issue credit rating of “bbb” for Ironshore Inc. in the Cayman Islands has been placed under the same status.

A.M. Best’s move is response to plans announced in May for Fosun, the investment arm of China’s biggest conglomerate, to buy the rest of Ironshore it doesn’t already own. It purchased a 20 percent stake in February.

A.M. Best noted that “Ironshore continues to maintain solid standalone rating attributes,” and that the deal should give it larger access to “long term committed capital and the potential for a more global distribution platform.” It said the review status is more about Fosun.

“The under review with negative implications reflects A.M. Best’s concerns regarding Fosun’s credit profile and its financial leverage, which could potentially place a strain on Ironshore’s stand-alone capitalization under certain stress scenarios.”

A.M. Best said the “under review” status will be removed after the M&A deal closes, and the ratings entity can finish a detailed assessment of the post-acquisition Ironshore and the new capital structure with Fosun in the picture.

Source: A.M. Best

Topics Mergers & Acquisitions AM Best