A.M. Best Assigns "a+" Rating to Senior Debt Of Protective Life; Preferred Securities Get "a".OLDWICK, N.J.--(BUSINESS WIRE)--July 12, 1999-- A.M. Best Co. today assigned an "a+" rating to the outstanding senior debt issued by the Protective Life Corporation (Protective) and an "a" rating to the existing preferred securities of Protective Life Capital I and II. A.M. Best also 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. its financial strength ratings on Protective's various life/health and property/casualty insurance subsidiaries. A.M. Best said the ratings are based on the diversity and strength of Protective's profitability. This consistent profitability is a result of the company's well-managed growth strategy, which is driven by an effective management team with a proven track record. The rating agency also noted Protective's effective asset/liability duration matching, which demonstrates its risk-management capabilities. Protective also carries a moderate level of financial leverage, accompanied by a strong debt service capability. Over the past five years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time company's diversified diversified (di·verˑ·s revenue and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. sources have generated consistently strong operating returns on assets, equity and capital, reflecting its persistent growth in earnings. A.M. Best noted that these operating fundamentals have been largely driven by Protective's management team, which has achieved top-line growth by opportunistically focusing on select product lines to take advantage of emerging market conditions and efficiently utilizing a diversified network of non-captive distribution channels. A.M. Best said the management team uses a conservative approach toward asset/liability duration matching and has instituted significant call and surrender provisions in almost all of the company's contracts, thus strengthening its earnings sustainability. The rating agency also noted that Protective has moderate financial leverage and stated that projected earnings should continue to provide strong debt service coverage. A.M. Best said the maturity of the company's primary businesses, in their respective product life cycles, generates seasoned profit margins, which further supports its expected stable earnings. Offsetting these strengths, A.M. Best noted, is the lack of scale in the company's businesses. However, the rating agency said Protective's effective use of technology largely mitigates this by allowing it to maintain a low-cost administrative structure. A.M. Best also said the company's statutory capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. (statutory surplus to total assets) is below its peer group's average. This is due largely to the fact that most of the company's business and historical growth has been in general account business, which requires a significant amount of capital. A.M. Best also said that approximately half of the company's invested assets are allocated into mortgage-related investments. A.M. Best said the prepayment risks Prepayment Risk The uncertainty related to unscheduled prepayment in excess of scheduled principal repayment. Notes: This risk is generally associated with mortgage securities. inherent in these interest-sensitive investments expose the company to earnings volatility; however, to date, this volatility has been mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by the company's asset/liability management Asset/Liability Management A technique companies employ in coordinating the management of assets and liabilities so that an adequate return may be earned. Also known as "surplus management. practices. The rating outlook is stable. The following ratings were assigned: - Protective Life Corp. - "a+" rating on senior debt. - Protective Life Capital I - "a" rating on trust preferred securities. - Protective Life Capital II - "a" rating on trust preferred securities. The following financial strength ratings were also affirmed: - Protective Life Insurance Co., at A+. - West Coast Life Insurance Co., at A+. - Protective Life and Annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. Insurance Co., at A+. - Empire General Life Assurance Corp., at A+. - Wisconsin National Life Insurance Co., at A. - Western Diversified Life Insurance Co., at A-. - United Dental Care of Texas Inc., at A-. - Western Diversified Casualty Insurance Co., at A-. Protective Life Corp. provides life and dental insurance Dental insurance is insurance designed to pay the costs associated with dental care. Dental insurance pays a portion of the bills from dentists, hospitals, and other providers of dental services. and retirement products. The company, headquartered in Birmingham, Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. ., reported assets of $11.9 billion and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $944 million as of Dec. 31, 1998. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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