ACE INA Holdings Inc., a subsidiary of
) will issue senior notes aggregating $950 million. Of the
total amount, $475 million senior notes will carry a coupon rate
of 2.70%, dated Mar 2023, while the remaining $475 million senior
notes will carry a coupon rate of 4.15%.
The net proceeds from the issuance will be deployed to fund the
payment of $500 million 5.88% senior notes maturing in Jun 2014
and $450 million of 5.60% senior notes maturing in May 2015.
After deployment, anything remaining from the proceeds will be
utilized by ACE Limited either in investing in marketable
securities or for meeting financial requirements of other
A.M. Best provided debt ratings of "a" to these notes with a
With this new issuance, ACE Limited's total debt will increase to
$5.7 billion. ACE Limited ended 2012 with a debt-to-capital ratio
of 14.7%, improving 120 basis points year over year. However,
following the new issue, the debt capital ratio will increase by
250 basis points. Nevertheless, it is a prudent strategy by ACE
Limited issuing debt at a lower coupon and using the proceeds to
redeem debts of higher coupon rates.
The new issue comes with additional interest burden. However, the
company's solid operational performance generates enough funds to
service the debt uninterruptedly. Its interest expense in 2012
was $250 million, same as the year-ago level.
ACE Limited's operating earnings in the fourth quarter were
approximately 11% ahead of the Zacks Consensus Estimate. The
Zacks Consensus Estimate for 2013 is currently pegged at $7.90
per share, above the company's guided range of $6.60-7.00 per
share and up 0.4% year over year.
ACE Limited currently carries a Zacks Rank #3 (Hold). Property
and casualty insurers,
Cincinnati Financial Corp.
Arch Capital Group Ltd.
XL Group plc
), among others, carry a Zacks Rank #1 (Strong Buy) and are worth
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