S&P reviewing Allied World Assurance's ratings

Allied World Assurance currently carries a "BBB" counterparty rating from S&P, which is considered investment-grade. Allied World Assurance's operating units currently have "A-" counterparty and financial strength ratings. All the ratings are on a negative credit watch.

Any potential downgrade would likely be no more than one notch.

A negative credit watch means there is a 50 percent chance a rating will be downgraded within three months.

The watch comes after Allied World Assurance said it plans to acquire Darwin Professional Underwriters Inc. for $550 million.

The acquisition of Darwin would diversify its operations, but also increase Allied World Assurance's risk profile by introducing a relatively new book of business and client profile, S&P said in a statement.

Darwin typically focuses on providing professional liability insurance to smaller clients, while Allied World Assurance is more focused on larger clients, S&P said in the statement.

Shares of Allied World Assurance fell 57 cents to $39.06 in late-day trading. Darwin shares gained 5 cents to $30.85.