Moody's affirms Sedgwick

Moody's Investors Service said it affirmed the B2 corporate family rating and the B3 second-lien term loan of Sedgwick Holdings, Inc., a holding company for Sedgwick Claims Management Services, Inc., following the announcement that Sedgwick plans to acquire Specialty Risk Services, Inc. for $278 million.

The outlook is stable.

The transaction is subject to customary regulatory approval and is expected to close during the first quarter of 2011, Moody's said, noting that it has placed the B1 first-lien term loan on review for possible downgrade due to an expected increase in financial leverage.

"The proposed transaction will diversify the company's client base and product offerings," said Enrico Leo, Moody's lead analyst for Sedgwick.

Sedgwick's adjusted debt-to-EBITDA ratio, as measured by Moody's, was 5.9x for the 12 months through Sept. 2010.

According to the agency, Sedgwick's ratings reflect the company's substantial financial leverage, leading to a low level of financial flexibility and somewhat weak interest and fixed-charge coverage.

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