Assured Assure going through $10 billion publicity to UK water utilities

US insurer Assured Warranty has over $10 billion publicity to a number of of the UK’s most troubled water utilities, in accordance with a report revealed as we speak in The Monetary Occasions (FT).

The New York-listed insurance coverage firms may find yourself on the hook to lenders within the case of defaults or missed curiosity funds by firms together with Thames Water and Southern Water. Dealing with pressures from inflation and elevated regulatory consideration, these UK water firms are labouring underneath £60 billion in debt, in accordance with the report.

In an emailed assertion to the FT, Nick Proud, a senior managing director at Assured Warranty, stated: “We really feel the UK water firm debt we now have insured has a robust credit score profile, because it supplies an important public service and is in a well-regulated trade the place we assure the senior stage debt, all of which has underlying funding grade rankings. Thus far, a UK water firm has not defaulted on their debt.”

The FT revealed that, in accordance with outcomes revealed in March, the group has constructed up an publicity of about $1.9 billion to Thames Water alone, with Southern Water its largest non-US publicity at $2.2 billion. The outcomes additionally present that Anglian Water, Yorkshire Water and Dŵr Cymru Welsh Water are all amongst its high 10 non-US holdings.

The report famous that Assured Warranty has been accelerating its exercise within the UK water sector over the previous 18 months, saying a brand new deal to supply cowl to lenders to Portsmouth Water in June, whereas final yr it agreed to supply liquidity services to Yorkshire Water.

The outlook for UK water firms

The FT highlighted that ranking company S&P has unfavorable outlooks for about two-thirds of the UK water firms it charges. And Fitch Scores downgraded Southern Water’s credit standing on Friday, whereas sustaining a unfavorable outlook.

The UK authorities has been stated to have mentioned plans to place failing water firms right into a “particular administration regime”, whereas UK water regulator Ofwat is intently monitoring the monetary well being of 5 UK firms — Thames Water, Southern Water, SES Water, Portsmouth Water and Yorkshire Water.

The report famous that Thames Water, Southern Water and Yorkshire Water every secured commitments from shareholders to place in a whole lot of thousands and thousands of kilos of further funding in latest weeks in a bid to shore up their funds.

Assured Warranty’s publicity

The report additionally revealed Assured Warranty’s publicity to UK water firms is almost equal to the group’s complete “claims-paying sources”, which stood at $10.8 billion on the finish of March.

The insurer carries sturdy credit score rankings of AA and A1 from S&P and Moody’s respectively.

In his assertion to the FT, Proud stated that Assured Warranty had a “lengthy historical past of efficiently mitigating potential losses” and famous that the group had maintained “a comparatively fixed stage of claims paying sources over the previous 15 years”.