Moody’s has affirmed retail broker Acrisure’s credit rating at B3, following the news that the intermediary is refinancing its debt obligations while upgrading its outlook from negative to stable.
Acrisure is borrowing $2.8bn in the form of a senior secured loan, rated at B2 by Moody’s. The ratings agency also reaffirmed its B2 rating on Acrisure’s current credit facilities and debt, maintaining a Caa2 rating on senior unsecured borrowing.
The borrowing will fund the employee-owned broker’s aggressive appetite for acquisitions, with the intermediary buying at least 100 smaller agencies a year.
“Moody's expects that Acrisure will generate positive free cash flow, net of contingent earnout payments and scheduled debt amortization, through 2020 and beyond,” noted the credit ratings agency.
“The growing proportion of owned business and the improving free cash flow support the stable rating outlook,” Moody’s added.
The ratings agency described the company’s debt to Ebitda ratio of 7.5x as a “continuing credit challenge”.
If the Acrisure’s debt to Ebitda ratio deteriorates any further, Moody’s said it could downgrade the intermediary. Conversely, if the debt to earnings metric improves to below 6x, it could upgrade its rating.
