fabriziof
Forumer storico
Ora vedremo il rating del bond. Mi aspetto che il rating venga equalizzato ai subordinati di GW
Fitch Affirms Great-West Lifeco's Ratings Following Irish Life Acquisition Announcement Ratings Endorsement Policy
19 Feb 2013 9:38 AM (EST)
Fitch Ratings-Chicago-19 February 2013: Fitch Ratings has affirmed the ratings of Great-West Lifeco (TSE:GWO) including the holding company's Issuer Default Rating (IDR) at 'A+' and all outstanding senior debt and hybrid issues, as well as the Insurer Financial Strength (IFS) ratings of all operating subsidiaries at 'AA'. The Rating Outlook is Stable.
Today's action follows the announcement that GWO will be acquiring Irish Life Group Limited (Irish Life) for EUR1.3 billion. The transaction is expected to close in the third quarter of 2013 subject to customary regulatory approvals.
KEY RATING DRIVERS
Fitch's affirmation reflects its belief that GWO's capitalization and leverage will not be materially affected by the acquisition; the integration risk derived from the acquisition will be reasonably well managed; and that Irish Life provides strategic benefits for GWO.
Fitch anticipates that GWO will use CAD1.25 billion of new common equity, euro-denominated senior debt and internal cash resources to finance the proposed acquisition. Fitch believes that GWO's pro forma financial leverage increase of roughly 1.5 points is still within an acceptable level for GWO's current rating category. Fitch expects that the Irish Life acquisition will add to GWO's goodwill, which totaled CAD5.4 billion at year-end 2011.
Fitch believes that GWO's acquisition of Irish Life will provide the company with critical scale in the Irish market as well as operational synergies and expense savings. GWO's subsidiary, Canada Life (Ireland) Limited, has operated in Ireland since 1903 where it currently is the seventh largest life insurer with a 5% market share. The acquisition will move GWO to the top position in Ireland with a market share greater than 30%. The proposed transaction is expected to contribute approximately 10% to GWO's total earnings. Execution risk is mitigated in part by GWO's existing knowledge of the Irish market and by GWO's track record of supplementing growth through acquisitions.
Fitch views Irish Life's business model as low risk. Over 80% of Irish Life's insurance liabilities are unit-linked pensions and savings products, where investment risk is borne by the policyholders. Irish Life is well-capitalized with a local regulatory solvency ratio of 184% at June 30, 2012, in excess of the Central Bank of Ireland's capital requirement of 150%. Fitch expects that GWO will maintain Irish Life's capitalization at or above current levels.
Following the Irish Life acquisition, GWO's Eurozone exposure within its general account investment portfolio increases from CAD3.6 billion to CAD5.2 billion. Fitch believes that over time GWO will reduce Irish Life's holdings of European sovereign bonds and invest the proceeds in high quality corporate securities. Fitch believes GWO has mitigated a portion of the currency risk associated with this transaction. Interest expense on the new Euro-denominated bond will net against the Euro-denominated income stream from Irish life resulting in lower earnings exposure to foreign exchange translation. Additionally GWO will use forward contracts to hedge a portion of foreign exchange risk.
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