S&P rates Sedgwick loans B, CCC+

S&P said it affirmed its B long-term issuer credit rating on Sedgwick Inc. and Sedgwick Claims Management Services Inc. and removed the ratings from CreditWatch negative, where they were placed Dec. 6 following Sedgwick's announcement that it entered into a purchase agreement to acquire Cunningham Lindsey, a global loss-adjusting, claims-management, and risk-solutions company.

At the same time, S&P assigned a B debt rating to Sedgwick's proposed incremental $735 million (fungible) first-lien term loan due 2021, with a 3 recovery rating, indicating an expectation of meaningful (rounded estimate: 65%) recovery in the event of a payment default.

S&P also assigned a CCC+ debt rating to Sedgwick's proposed $200 million (nonfungible) second-lien term loan due 2022, with a 6 recovery rating, indicating an expectation of negligible (rounded estimate: 5%) recovery in the event of a payment default.

The stable outlook on Sedgwick reflects S&P’s expectation that favorable U.S. employment conditions combined with the company's high client retention, new client wins, and increased product/service cross-selling will drive mid-single-digit revenue growth, with revenues reaching close to $2.7 billion in 2018 and $2.8 billion in 2019, S&P said in a news release.

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