Moody’s downgrades FWD, debt

Moody's Investors Service said it downgraded FWD Ltd.’s issuer and senior unsecured debt ratings to Baa3 from Baa2 and the junior subordinated debt rating on its subordinated perpetual capital securities to Ba2 (hyb) from Ba1 (hyb).

The outlook is now stable.

At the same time, the agency affirmed the A3 insurance financial strength rating of FWD Life Insurance Co. (Bermuda) Ltd., a subsidiary of FWD, with a stable outlook.

Moody’s said the downgrade reflects its view that the diversification benefits to holding company creditors gained from ownership of FWD General Insurance Co. Ltd. (unrated), the non-life insurance subsidiary of FWD, through the contributions of dividends, have become and will remain less evident, relative to the group's interest expenses.

As a result, the narrower notching between FWD’s issuer rating and FWD Life’s insurance financial strength rating Moody’s ascribed before is no longer warranted. Therefore, the notching has widened to three notches, which is in line with the agency’s standard notching to reflect the structural subordination of the holding company.

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