Fitch's downgrade of the holding company ratings reflects a financial leverage and fixed-charge coverage
ratio profile that is no longer consistent with narrow notching.
These positive factors are partially offset by China Minsheng Investment Group Corp., Ltd.'s (CMIG) majority ownership, Sirius Group's more moderate business profile and good fixed-charge coverage
On the other hand, any events bringing the company's fixed-charge coverage
below 2.3x such as deterioration in the operating environment, lower rents, large development projects or debt-financed acquisitions would trigger a downgrade, S&P added.
The outlook change follows narrower covenant headroom under the firm's senior note fixed-charge coverage
requirement, S&P said.
In most cases the fixed-charge coverage
ratio is seen as an extension of the more standard interest coverage ratio (often referred to as times interest earned), a ratio itself defined along the lines of a comparison of a company's operating earnings to its interest expenses.
Fitch expects VNO's leverage to sustain in the mid to high 6x range - higher than AAT - and a fixed-charge coverage
ratio of approximately 2.0x, but VNO is significantly larger than AAT and has a significantly better capital markets access.
For 2011, debt plus preferred-to-capital ratio is expected to remain about 25% and fixed-charge coverage
to be about 2.2x.
Enstar's operating earnings-based fixed-charge coverage
was favorable, averaging a very strong 12.8x from 2013 to 2017, with 8.2x for 9M18.
"We view the debt associated with this program as operating leverage rather than financial leverage, so AIG's financial leverage and fixed-charge coverage
metrics are unaffected, " S&P said in a statement.
- financial leverage ratio below 23% and fixed-charge coverage
ratio above 9x on a prolonged basis, while maintaining a strong market franchise and capital position.
The "stable" outlook captures expectations that the company will strengthen its overall cash flow and coverage in the next year or two such that fixed-charge coverage
improves to 2.3x and above.
In light of this issuance and the company's expected debt redemption activity, Fitch expects Torchmark to maintain financial leverage below 26% and fixed-charge coverage
above 10x through year-end 2018.