Cross Monetary Corp. — Moody’s charges Cross Monetary’s repriced and elevated time period mortgage B2

Ranking Motion:

Moody’s charges Cross Monetary’s repriced and elevated

time period mortgage B2

8 March 2021

Firm including $100 million senior secured time period mortgage, elevating complete time period mortgage borrowings to $450

million

New York, March 8, 2021 – Moody’s Traders Service has assigned a B2 ranking to a repriced $450

million (together with pending $100 million enhance) first-lien senior secured time period mortgage being issued by

Cross Monetary Corp. (Cross Monetary). The corporate plans to make use of internet proceeds together with current

money to repurchase shares from sure fairness holders, fund near-term acquisitions and pay associated

charges and bills. The corporate can be upsizing its revolving credit score facility to $80 million (rated B2).

The ranking outlook for Cross Monetary is unchanged at secure.
RATINGS RATIONALE
Based on Moody’s, Cross Monetary’s rankings mirror its good regional market presence in small

and center market insurance coverage brokerage significantly in Maine, Massachusetts and New Hampshire.

The corporate has good diversification throughout purchasers, consumer industries, producers, and insurance coverage

carriers primarily for P&C merchandise with some worker advantages. Cross Monetary additionally has a observe

report of wholesome EBITDA margins and money move.
These strengths are offset by elevated monetary leverage put up transaction, modest curiosity protection,

and a geographic focus the place the highest three states account for practically 80% of complete income.

Cross Monetary’s revenues and earnings are topic to fluctuations within the financial and regulatory

situations of the northeast US, particularly Maine and Massachusetts. Different challenges embody the

firm’s restricted scale relative to different rated insurance coverage brokers in addition to potential liabilities arising

from errors and omissions, a danger inherent in skilled companies.
Cross Monetary reported income of $215 million in 2020, up 14% from 2019 with natural progress

round 4%. EBITDA margins have remained strong, helped by expense financial savings.
Following the refinancing, Moody’s estimates that Cross Monetary’s professional forma debt-to-EBITDA will

Story continues

be round 5.5x with (EBITDA – capex) protection of curiosity round 2.5x and a free-cash-flow-to-

debt ratio within the low-to-mid single digits. These professional forma metrics embody Moody’s changes for

working leases, run-rate earnings from acquisitions and sure different debt-like obligations. The

secure outlook displays Moody’s expectation that Cross Monetary will cut back leverage to about 5x

over the subsequent 12 months via continued EBITDA progress supplemented by tuck-in acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the corporate’s restricted scale and geographic focus, an improve of Cross Monetary’s

rankings is unlikely within the intermediate time period. Components that might contribute positively to the corporate’s

credit score profile embody: (i) elevated scale and geographic diversification, (ii) debt-to-EBITDA ratio

maintained under 4.5x, (iii) (EBITDA – capex) protection of curiosity exceeding 3.5x, and (iv) free-

cash-flow-to-debt ratio exceeding 7%.
The next elements may result in a downgrade of Cross Monetary’s rankings: (i) income decline and/

or disruptions to current or newly acquired operations, (ii) debt-to-EBITDA ratio persistently above

5.5x, (iii) (EBITDA – capex) protection of curiosity under 2.5x, (iv) free-cash-flow-to-debt ratio under

4%, or (v) deviation from the corporate’s historic monetary insurance policies.
Moody’s has assigned the next ranking to Cross Monetary Corp.:
$450 million (together with pending $100 million enhance) first-lien senior secured time period mortgage maturing

September 2027 at B2 (LGD3).
Moody’s maintains the next rankings on Cross Monetary Corp.:
Company household ranking at B2;
Chance of default ranking at B2-PD;
$80 million (together with pending $10 million enhance) first-lien senior secured revolving credit score facility

maturing September 2025 at B2 (LGD3);
$350 million first-lien senior secured time period mortgage maturing September 2027 at B2 (LGD3) (ranking to be

withdrawn upon closing of the brand new time period mortgage).
The ranking outlook for Cross Monetary Corp. is unchanged at secure.
The principal methodology used on this ranking was Insurance coverage Brokers and Service

Corporations revealed in June 2018 and accessible at

https://www.moodys.com/

researchdocumentcontentpage.aspx?docid=PBC_1121967

. Alternatively, please see the Ranking

Methodologies web page on www.moodys.com for a duplicate of this system.
Based mostly in Bangor, ME, Cross Monetary ranks among the many high 30 US insurance coverage brokers primarily based on 2019

revenues, in response to Enterprise Insurance coverage. The corporate’s product combine is about 60% business

insurance coverage, 25% private and 15% worker advantages and associated merchandise, all distributed to small

and center market companies and people throughout New England. In 2020, Cross generated complete

income of $215 million.
REGULATORY DISCLOSURES
For additional specification of Moody’s key ranking assumptions and sensitivity evaluation, see

the sections Methodology Assumptions and Sensitivity to Assumptions within the disclosure

kind. Moody’s Ranking Symbols and Definitions may be discovered at:

https://www.moodys.com/

researchdocumentcontentpage.aspx?docid=PBC_79004

.

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The World Scale Credit score Ranking on this Credit score Ranking Announcement was issued by considered one of Moody’s

associates exterior the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt

am Primary 60322, Germany, in accordance with Artwork.4 paragraph 3 of the Regulation (EC) No

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disclosures for every credit standing.
Chris Scott

AVP-Analyst

Monetary Establishments Group

Moody’s Traders Service, Inc.

250 Greenwich Road

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Shopper Service: 1 212 553 1653
Sarah Hibler

Affiliate Managing Director

Monetary Establishments Group

JOURNALISTS: 1 212 553 0376

Shopper Service: 1 212 553 1653

Releasing Workplace:

Moody’s Traders Service, Inc.

250 Greenwich Road

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Shopper Service: 1 212 553 1653

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