A.M. Best Affirms Financial Strength Ratings of Allstate; Assigns Debt Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 14, 2002 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength ratings of the property/casualty and life/health affiliates of The Allstate Corporation. In addition, A.M. Best assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. an "a+" senior debt rating to The Allstate Corporation's $550 million, 5.375% five-year notes in line with the previously assigned indicative debt ratings as part of the corporation's $2 billion June 2000 shelf registration. Proceeds from the recent debt offering were used to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. all 22 million shares of the 7.95% Cumulative Quarterly Income Preferred Securities issued in 1996 by Allstate Financing I. The ratings reflect Allstate's superior financial strength, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating performance and significant market franchise. The strong capital position, stable balance sheet and excellent liquidity reflect management's conservative operating and financial philosophies. This commitment to capital discipline is evident in the relatively low financial leverage maintained at The Allstate Corporation, which is less than 20% (including trust preferreds). In addition, the corporation's ability to service its annual interest expense is strong. Allstate Corp. maintains additional assets at the holding company level of more than $1.1 billion available for corporate purposes such as additional subsidiary capital, stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. or acquisitions. While Allstate continues to generate favorable returns, it has, however, fallen from its historic double-digit levels. These declines have been driven by increased auto loss costs, intense pricing competition in the automobile sector and increased frequency and severity trends in its homeowners' book of business. With its implementation of Strategic Risk Management, an integrated approach to pricing, marketing and underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. processes, Allstate should generate improved automobile results. The group has continued its aggressive actions with regards to the homeowners' book of business, including rate increases, revised underwriting guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. and product enhancements. However, improved homeowner results will take longer to correct due in part to its 12-month policy as compared with six-month auto policies. Allstate's life insurance operations (Allstate Financial Group) are characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by a well-balanced business position, solid earnings capacity, favorable investment profile and strong liquidity. Risk-based capital adequacy has been acceptable and is expected to improve further given the group's consistent earnings and ongoing focus on less capital-intensive Capital-intensive Used to describe industries that require large investments in capital assets to produce their goods, such as the automobile industry. These firms require large profit margins and/or low costs of borrowing to survive. products. Additionally, Allstate Financial Group's financial flexibility benefits from its role within the Allstate organization. Allstate has implemented various strategic initiatives to enhance its operating performance, accelerate organic growth and more fully benefit from its significant name recognition. These initiatives include the creation of multiple distribution channels, a comprehensive risk management platform, expanded penetration into the independent agent market and a shift to target market-specific advertising. As a result, Allstate faces execution risk in implementing its plan. Despite these risks as well as the modest decline in results, A.M. Best believes that over the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , these initiatives--in conjunction with the group's efficient capital management--will allow Allstate to strengthen its leadership position. For a complete listing of Allstate's debt and financial strength ratings, please visit http://www.ambest.com/press/allstate2.pdf. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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