A.M. Best Affirms Ratings of StanCorp Financial Group.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "a+" of Standard Insurance Company (Standard Insurance) (Portland, OR) and The Standard Life Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (White Plains, NY), together known as The Standard, both wholly-owned insurance subsidiaries of StanCorp Financial Group, Inc. (StanCorp) (Portland, OR) [NYSE NYSE See: New York Stock Exchange : SFG SFG StanCorp Financial Group SFG San Francisco Giants (baseball team) SFG Special Forces Group SFG Sum Frequency Generation SFG Square Foot Gardening SFG Symmetrical Field Geometry (JBL speaker technology) ]. Concurrently, A.M. Best has affirmed the ICR of "bbb+" and existing debt ratings of StanCorp. The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.) The rating affirmations reflect the group's established presence in the employee benefits market, historically favorable operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before , sound risk-adjusted capitalization at the operating subsidiaries and its reasonable financial leverage. StanCorp has demonstrated strong GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and statutory operating trends for numerous years, driven primarily by premium revenue and earnings in its employee benefits business. The group continues to maintain a disciplined underwriting strategy, which favors profitability over top-line growth. StanCorp's insurance subsidiaries are adequately capitalized and continue to provide dividend support to service outstanding debt and pay stockholder dividends. A.M. Best anticipates StanCorp will continue to report unadjusted financial leverage under 30% and its coverage ratio will remain more than adequate. More recently, the group's earnings power has been partially constrained by its asset management segment, which has been negatively impacted by the U.S. economy. Additionally, while revenue growth has continued to be within targeted levels, new sales in its group life and long-term disability product lines are being challenged by the always competitive environment as well as difficult economic conditions. While so far in the current recession, StanCorp has not seen an increase in claim incidence, A.M. Best anticipates individual and group disability income benefit ratios could increase near term. A.M. Best remains concerned with the company's significant exposure to commercial mortgage loans, given current economic conditions. Relative to its peers, The Standard holds one of the largest concentrations in this asset class at more than 40% of its invested assets. A.M. Best also notes the size of the loans underwritten has increased somewhat in recent years and that nearly half of the portfolio is in retail properties. In general, A.M. Best is most cautious on retail, hotel and office properties. Despite this exposure, The Standard has reported favorable results with modest realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. to date and considerably fewer delinquencies relative to the insurance industry historically. Performance has been driven by the portfolio's smaller average loan size, lower loan to value, required personal recourse on most loans, and the company's seasoned underwriting staff. However, should the performance of its mortgage loan portfolio significantly deteriorate in the coming year, A.M. Best would likely reassess StanCorp's ratings. The following debt ratings have been affirmed: StanCorp Financial Group, Inc.-- --"bbb+" on $250 million 6.875% senior unsecured notes, due 2012 --"bbb-" on $300 million 6.875% junior subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before , due 2067 The following indicative debt ratings have been affirmed under the shelf registration: StanCorp Financial Group, Inc.-- -- "bbb+" on senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. -- "bbb" on subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". -- "bbb-" on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
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