U.S. markets closed
  • S&P Futures

    3,740.25
    -25.25 (-0.67%)
     
  • Dow Futures

    30,709.00
    -169.00 (-0.55%)
     
  • Nasdaq Futures

    12,341.25
    -113.75 (-0.91%)
     
  • Russell 2000 Futures

    2,118.40
    -26.10 (-1.22%)
     
  • Crude Oil

    64.12
    +0.29 (+0.45%)
     
  • Gold

    1,689.20
    -11.50 (-0.68%)
     
  • Silver

    25.20
    -0.26 (-1.03%)
     
  • EUR/USD

    1.1959
    -0.0020 (-0.17%)
     
  • 10-Yr Bond

    1.5500
    +0.0800 (+5.44%)
     
  • Vix

    28.57
    +1.90 (+7.12%)
     
  • GBP/USD

    1.3878
    -0.0016 (-0.11%)
     
  • USD/JPY

    107.9310
    -0.0450 (-0.04%)
     
  • BTC-USD

    46,939.17
    -4,469.82 (-8.69%)
     
  • CMC Crypto 200

    938.21
    -49.00 (-4.96%)
     
  • FTSE 100

    6,650.88
    -24.59 (-0.37%)
     
  • Nikkei 225

    28,310.47
    -619.64 (-2.14%)
     

Acrisure, LLC -- Moody’s says Acrisure’s ratings remain unchanged following announcement of term loan add-on

·12 min read
background image
background image

Announcement:

Moody’s says Acrisure’s ratings remain unchanged

following announcement of term loan add-on

25 January 2021

Company adding $700 million to existing senior secured term loan, raising total outstanding term

loan to $3.9 billion

New York, January 25, 2021 – Moody's Investors Service says the B3 corporate family rating and

B3-PD probability of default rating on Acrisure, LLC (Acrisure) remain unchanged following the

company’s announcement that it plans to borrow an additional $700 million under its senior secured

term loan (rated B2). The company intends to use net proceeds from the offering to refinance

existing secured debt, fund future acquisitions and pay related fees and expenses. The rating

outlook for Acrisure is unchanged at stable.
RATINGS RATIONALE
Acrisure's ratings reflect its growing market presence in US insurance brokerage and select

international markets, its good mix of business across property & casualty insurance and employee

benefits, and its healthy EBITDA margins. Acrisure maintains the existing brands of its many

acquired entities and allows them to operate fairly autonomously, while centralizing critical financial

reporting and compliance functions. Acrisure aligns the interests of its existing and acquired

businesses by including significant common equity in its purchase consideration. While GSO/

Blackstone holds a majority of Acrisure’s preferred equity, Acrisure Management and Agency

Partners own more than 90% of the firm's common equity.
These strengths are offset by Acrisure's large number and dollar volume of acquisitions and its rising

debt burden. The acquisition strategy heightens the firm's integration risk and its exposure to errors

and omissions in the delivery of professional services. The acquisitions also give rise to contingent

earnout liabilities that consume a substantial portion of Acrisure's free cash flow.
Acrisure’s performance is holding up relatively well through the coronavirus-related economic

slowdown with revenues of $1.4 billion for the first nine months of 2020 and strong EBITDA margins

helped by expense savings. The company’s organic growth was slightly negative for the first nine

months of 2020 while retention rates remained solid. Moody’s expects that Acrisure will continue to

limit its discretionary spending to maintain its credit profile as the economy recovers.
Giving effect to the proposed borrowing, Acrisure will have a pro forma debt-to-EBITDA ratio at or

slightly above 7.5x and (EBITDA - capex) interest coverage in the range of 1.5x-2x, per Moody's

estimates. The company is improving its cash flow generation, and produced positive free cash flow

after contingent earnout payments and scheduled debt amortization during the first nine months of

2020. These metrics incorporate the rating agency's adjustments for operating leases, contingent

earnout liabilities, changes in a warrant liability, and run-rate earnings from recent and pending

acquisitions. Moody's expects Acrisure to reduce its financial leverage over the next couple of years

in line with provisions it has agreed to with its preferred equity holders, and to continue generating

positive free cash flow after earnout payments and debt amortization.

background image
background image

Factors that could lead to a rating upgrade include: (i) debt-to-EBITDA ratio below 6x; (ii) (EBITDA

- capex) coverage of interest exceeding 2x; (iii) free-cash-flow-to-debt ratio exceeding 5%; and (iv)

declining proportion of revenue and earnings from newly acquired versus existing business.
Factors that could lead to a rating downgrade include: (i) debt-to-EBITDA ratio above 7.5x; (ii)

(EBITDA - capex) coverage of interest below 1.2x; (iii) free-cash-flow-to-debt ratio below 2%, or

negative free cash flow after contingent earnout payments and scheduled debt amortization; or (iv)

disruptions to existing or newly acquired operations.
The following ratings remain unchanged :
Corporate family rating at B3;
Probability of default rating at B3-PD;
$350 million senior secured revolving credit facility (undrawn) maturing in February 2025 at B2

(LGD3);
$3.9 billion (including pending $700 million increase) senior secured term loan maturing in February

2027 at B2 (LGD3);
$950 million senior secured notes maturing in February 2024 at B2 (LGD3);
$925 million senior unsecured notes maturing in November 2025 at Caa2 (to LGD6 from LGD5);
$400 million senior unsecured notes maturing in August 2026 at Caa2 (to LGD6 from LGD5).
The rating outlook for Acrisure is unchanged at stable.
The methodology used in these ratings was Insurance Brokers and Service Companies published

in June 2018 and available at

https://www.moodys.com/researchdocumentcontentpage.aspx?

docid=PBC_1121967.

Alternatively, please see the Rating Methodologies page on www.moodys.com

for a copy of this methodology.
Based in Grand Rapids, Michigan, Acrisure distributes a range of property & casualty insurance,

employee benefits and related products to small and midsize businesses through offices in a

majority of US states and through operations in the UK, Switzerland and Bermuda. The company

generated revenue of $2 billion for the 12 months through September 2020.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the

Moody's legal entity that has issued the rating.
This publication does not announce a credit rating action. For any credit ratings referenced in this

publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most

updated credit rating action information and rating history.
Chris Scott

AVP-Analyst

Financial Institutions Group

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653

background image
background image

Sarah Hibler

Associate Managing Director

Financial Institutions Group

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Releasing Office:

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653

© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their

licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT

OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS,

OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND

INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE

SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN

ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME

DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT.

SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR

INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED

BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK,

INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE

VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND

OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS

OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE

QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS

OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO

NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S

CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND

DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR

SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND

PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY

PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND

OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND

UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY

AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE,

HOLDING, OR SALE.
MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS

ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS

AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS,

background image
background image

ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT

DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER

PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT

LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR

OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED,

DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR

ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY

MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE

NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED

FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT

IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be

accurate and reliable. Because of the possibility of human or mechanical error as well as other

factors, however, all information contained herein is provided “AS IS” without warranty of any kind.

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit

rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when

appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot

in every instance independently verify or validate information received in the rating process or in

preparing its Publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents,

representatives, licensors and suppliers disclaim liability to any person or entity for any indirect,

special, consequential, or incidental losses or damages whatsoever arising from or in connection

with the information contained herein or the use of or inability to use any such information, even if

MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers

is advised in advance of the possibility of such losses or damages, including but not limited to:

(a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant

financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents,

representatives, licensors and suppliers disclaim liability for any direct or compensatory losses

or damages caused to any person or entity, including but not limited to by any negligence (but

excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt,

by law cannot be excluded) on the part of, or any contingency within or beyond the control of,

MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers,

arising from or in connection with the information contained herein or the use of or inability to use

any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS,

COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF

ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE

BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s

Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and

municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s

Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s

Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from

$1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies

background image
background image

and procedures to address the independence of Moody’s Investors Service credit ratings and credit

rating processes. Information regarding certain affiliations that may exist between directors of MCO

and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and

have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted

annually at

www.moodys.com

under the heading “Investor Relations — Corporate Governance —

Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the

Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited

ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136

972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale

clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access

this document from within Australia, you represent to MOODY’S that you are, or are accessing

the document as a representative of, a “wholesale client” and that neither you nor the entity you

represent will directly or indirectly disseminate this document or its contents to “retail clients” within

the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as

to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or

any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency

subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc.,

a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating

agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization

(“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-

NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated

obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit

rating agencies registered with the Japan Financial Services Agency and their registration numbers

are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including

corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated

by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to

MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging

from JPY125,000 to approximately JPY550,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory

requirements.