Moody's affirms ARG

Moody's Investors Service said it affirmed the B2 corporate family ratings of ARG Holdings, Inc. and its main subsidiary, Alliant Insurance Services, Inc., following the announcement that Alliant plans to acquire the U.S. retail operations of Jardine Lloyd Thompson Group plc. Moody's also affirmed the B2 rating on ARG's first-lien credit facilities and the B3 rating on its second-lien credit facility.

In the agency's opinion, JLT USA's operations complement the Alliant operations well in terms of geography and business specialties. The acquisition will be funded mostly through incremental borrowing, as permitted under the existing credit facilities, and cash on hand.

ARG's ratings reflect Alliant's position as a leading specialty broker, particularly in serving public entities, Indian Nations, law firms and other industry groups, Moody's said. Alliant generates strong operating margins and has successfully integrated a handful of acquisitions over the past several years.

The agency said these strengths are tempered by the company's significant financial leverage, with the adjusted debt to EBITDA ratio expected to increase to about 4x as a result of the JLT USA acquisition. This transaction also carries integration risk, given that JLT USA is just over one-fourth the size of Alliant in terms of revenues.

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