A.M. Best Assigns Debt Rating to Selective's New Senior Notes.OLDWICK, N.J. -- A.M. Best Co. has assigned a debt rating of "a-" to the forthcoming $100 million senior unsecured notes due 2035 to be issued by Selective Insurance Group, Inc. (Selective) (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : SIGI) (Branchville, NJ). The existing debt and financial strength ratings of Selective and its six intercompany pool members, led by Selective Insurance Company of America (Branchville, NJ), are unchanged. All ratings have a stable outlook. Selective expects that approximately half of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of the $100 million senior debt issuance will be placed in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. to meet principal repayments on existing debt over the next three years. The balance is planned to be used for general corporate purposes including share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . The rating reflects Selective's solid capitalization, favorable and consistent operating performance, quality of management team and strong regional market presence within the small commercial lines business segment. Furthermore the rating recognizes Selective's disciplined underwriting culture, broad product offerings, conservative investment philosophy and prudent capital management, which has contributed to the group's consistent operating profitability. Selective's debt to total capital at September 30, 2005 was 20.1%, down from 23.0% at year-end 2004 due to continued solid net income and debt reduction during the first nine months of the year. With the issuance of the $100 million of senior notes, the company's proforma debt to total capital would increase to 26.2% at September 30, 2005. However, adjusting for the nearly $50 million of proceeds from the offering that will be held in escrow for principal repayments, the company's proforma debt to total capital at September 30, 2005 was 23.3%. This leverage is approaching the high end of A.M. Best's expectations for Selective's debt ratings. Based on a review of Selective's sources and uses of funds and an expectation of continued profitable operating performance, A.M. Best is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op Selective will be able to maintain stable financial leverage measures at the holding company in 2005 and 2006. The following debt rating has been assigned with a stable outlook: Selective Insurance Group, Inc. -- --"a-" on $100 million 6.70% senior unsecured notes, due 2035 The following debt ratings are unchanged: Selective Insurance Group, Inc. -- --"a-" on $50 million 7.25% senior unsecured notes, due 2034 --"a-" on $305 million 1.6155% senior unsecured convertible notes, due 2032 --"bbb+" on $25 million 8.75% subordinated convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. , due 2008 The financial strength rating of A+ (Superior) is unchanged for the following intercompany pool members of Selective Insurance Group, Inc.: --Selective Insurance Company of America --Selective Way Insurance Company --Selective Insurance Company of the Southeast --Selective 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 --Selective Insurance Company of South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. --Selective Insurance Company of New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies and A.M. Best groups, please visit www.ambest.com/pc. 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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