Aviva has been downgraded by Moody's. The insurer's financial strength ratings (IFSR) have been downgraded by one notch across the board as a result of its acquisition of AmerUs Group.
The decision by Moody's means that Norwich Union's IFSR has been downgraded from Aa2 to Aa3.
The rating agency has deemed that the acquisition of AmerUs Group for $3.1bn, financed by $1.6bn equity, $1bn internal resources and $0.5bn incremental debt, has adversely affected Aviva's risk-adjusted capitalisation.
Stephen Hunnisett, vice president and senior analyst in Moody's European Insurance Group said "In Moody's opinion, the acquisition substantially increases the likelihood that Aviva will fail to meet the ratings expectations previously set out for the end of 2006.
"The extension of the already prolonged period over which certain metrics, particularly those related to financial flexibility, have been below that expected of a company rated Aa2 for IFSR was the main driver of the downgrade."
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