Summary
This 8-K filing from ACE Limited (now Chubb Ltd) on November 24, 2010, details the establishment of a new $400 million letter of credit (LOC) facility. This facility, established on November 18, 2010, involves ING Bank N.V., Lloyds TSB Bank plc, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and The Royal Bank of Scotland plc. The LOCs are primarily intended to support Funds at Lloyd's requirements for certain ACE affiliates but can also be used for general corporate purposes. The new facility, with LOCs expiring by December 31, 2015, replaces a previous £300 million LOC agreement. The agreements include covenants related to liens, asset sales, mergers, and financial metrics such as a minimum consolidated net worth of $9.570 billion and a debt-to-capitalization ratio not exceeding 0.35 to 1. The agreements are currently unsecured but allow for the voluntary posting of collateral to reduce pricing, and collateral may be required if the Guarantors' ratings fall below certain levels or if default events occur.
Key Highlights
- 1ACE Limited entered into new letter of credit (LOC) facility agreements totaling $400 million.
- 2The LOCs are primarily to support Funds at Lloyd's requirements for affiliates, with flexibility for general corporate purposes.
- 3The facility has a commitment period until December 31, 2014, and LOC expiration dates up to December 31, 2015.
- 4Two wholly-owned subsidiaries, ACE Bermuda Insurance Ltd. and ACE Tempest Reinsurance Ltd., act as Guarantors for ACE's obligations.
- 5The LOC agreements are currently unsecured but permit the voluntary posting of collateral to reduce pricing.
- 6Collateral may be required under specific circumstances, including a decline in the Guarantors' credit ratings or default events.
- 7Key financial covenants include maintaining a minimum consolidated net worth of $9.570 billion and a total debt to total capitalization ratio of no more than 0.35 to 1.