A.M. Best Affirms Financial Strength Ratings of Torchmark Corporation's Operating Subsidiaries; Affirms Debt Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 10, 2004 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 A+ (Superior) of Torchmark Corporation's (Delaware) (NYSE NYSE See: New York Stock Exchange : TMK TMK The Mushroom Kingdom (Super Mario Bros video games) TMK Torchmark Corporation (McKinney, TX) TMK Tax Map Key (Hawaii) TMK To My Knowledge ) life/health insurance subsidiaries. Concurrently, A.M. Best has affirmed all the existing debt ratings of Torchmark. The outlook for all ratings is stable. The ratings reflect the group's exceptional earnings, strong debt service capacity, superior capital position and multiple channels of distribution. Torchmark's core life/health insurance businesses produce strong and consistent earnings, which generously support fixed charges. A major portion of Torchmark's earnings is generated from its mature block of individual life insurance, which has experienced favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mortality and persistency. The group's supplemental health business also produces significant underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. and cash flows. A.M. Best expects Torchmark to continue to reap above-average returns in its life insurance operations and remain a major player in the senior market for supplemental health products. In addition, the low to middle income target market provides sufficient growth opportunities for the group. The life/health insurance subsidiaries maintain superior risk-adjusted capitalization despite dividend requirements to the ultimate parent. Over the last several years, excess capital of the subsidiaries has been used principally for stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. . Additionally, Torchmark has restructured its debt, issuing long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. at favorable rates, while redeeming the trust preferred issue. Given its moderate and declining financial leverage--debt plus preferreds to total capital at approximately 24%--A.M. Best believes Torchmark's debt service is more than adequately supported by the earnings and cash flow capabilities of its life/health insurance operations. Torchmark's diverse distribution sources have contributed to favorable premium growth in core lines, allowing the group to realize expense savings as a result of economies of scale in its individual businesses and to operate profitably in its target market of low and middle income consumers. Offsetting factors are the competitive challenges in its core life/health lines including the ability to attract and retain productive agents, regulatory pressures in the supplemental health business and the group's exposure to litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . For a complete listing of Torchmark Corporation's debt and financial strength ratings, please visit www.ambest.com/press/061010torchmark.pdf. For a list of A.M. Best's debt ratings, please visit http://www3.ambest.com/debtratings/. 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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