Acquisition by Axis strengthens Aviabel: S&P
S&P Global Ratings upgraded aviation re/insurer Aviabel Belge d'Assurances Aviation after its acquisition by Bermuda-based property/casualty (re)insurer AXIS Capital Holdings.
On April 1, 2017, AXIS Capital completed its acquisition of Aviabel. The ratings agency regards Aviabel as highly strategic to AXIS, given AXIS group's aim of reinforcing its book of aviation business and the internal reinsurance protection that Aviabel will contract with its new owner.
S&P therefore has raised its ratings on Aviabel to 'A' from 'A-' and removed the company from CreditWatch positive, where it had been placed on Dec. 6.
The stable outlook reflects expectation that over the next two years, Aviabel will maintain its highly strategic importance to its new parent.
Being part of a larger group with diverse product offerings and geographic spread will strengthen Aviabel's credit quality, S&P said. The transaction fits into AXIS' growth and diversification strategy since it will increase its reach in the global aviation sector. Aviation and aerospace insurance, totalling more than $50 million for AXIS, contributed 1 percent of the group's gross written premium in 2016. Aviabel will consequently double AXIS' aviation business' turnover, helping AXIS accelerate its ambition to expand in the aviation market.
Thanks to its long presence in the industry and its technical capabilities, Aviabel has developed strong know-how and a sound reputation in the general aviation market, according to S&P.
AXIS aims to protect Aviabel with strong internal reinsurance agreements, demonstrating management's long-term commitment to support its newly acquired entity. This coverage will be in addition to Aviabel's current external reinsurance program, S&P said.
Aviabel's reliance on aviation business makes it more sensitive to the currently difficult operating environment, characterized by continuous excess capacity, which has contributed to downward pressure on pricing. Nevertheless, following the transaction, S&P expects Aviabel's competitive position to benefit over the longer term from the group's larger balance sheet, strong reputation in markets where it operates, wider business and geographic diversification, and economies of scale.
Today’s top stories
Chubb replaces head of North America commercial unit
Head of China’s insurance regulator under investigations
Gibraltar may attract insurers in the wake of Brexit, says minister of commerce
Everest Insurance hires AIG exec for a new practice in US
Malta’s Building Block enters Spanish market with gadget insurance
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
