KBRA Affirms and Subsequently Withdraws Ratings for Lombard International
14 Oct 2024 | New York
KBRA affirms the A insurance financial strength rating of Lombard International Assurance S.A. (LIA SA) and the BBB LTCR issuer rating of LIA Holdings Limited. The Outlook for all ratings is Developing. The Developing Outlook for LIA SA reflects the pending sale of the company and other entities of Lombard’s European operations to the Utmost Group. A change in ownership raises uncertainty with respect to how the company will be managed in the future with respect to strategy, capitalization, and risk profile. While LIA Holdings Limited is not being sold as part of the pending transaction, the Developing Outlook for the holding company reflects the expected sale of LIA SA and certain related entities whereby deal proceeds will be utilized for the repayment of any remaining outstanding debt, which management expects to occur by year-end. Subsequently, KBRA withdraws the ratings for LIA SA and Lombard Holdings Limited at the request of the company.
Key Credit Considerations
The ratings reflect Lombard’s recurring fee-based business model with modest balance sheet risk from operations, resiliency in results supported by trends in assets under administration, a strong position in a growing market with high barriers to entry, a skilled management team supplemented with technical expertise, and long-standing, deep distribution relationships. Offsetting these strengths is a business model highly dependent on a favorable tax regulatory environment and, at the holding company, currently limited sources of liquidity and elevated financial leverage, albeit reduced over the past year.
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