A.M. Best Assigns Indicative Debt Ratings to ProAssurance Corporation's Shelf Registration.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 12, 2004 A.M. Best Co. has assigned indicative ratings of "bbb-" to unsecured senior debt, "bb+" to 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". and "bb" to 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. of ProAssurance Corporation's (ProAssurance) (NYSE NYSE See: New York Stock Exchange : PRA PRA - PRAgmatics. The language used by COPS for specification of code generators. ["Metalanguages of the Compiler Production System COPS", J. Borowiec, in GI Fachgesprach "Compiler-Compiler", ed W. Henhapl, Tech Hochs Darmstadt 1978, pp. 122-159]. ) (Birmingham, AL) recently filed $250 million universal shelf offering. Additionally, the "bbb-" debt rating assigned to ProAssurance's $100 million, 20-year, senior unsecured 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. issued in July of 2003, and the financial strength ratings of A- (Excellent) on the group's core insurance subsidiaries, The Medical Assurance Company Inc, Red Mountain Casualty Insurance Company Inc, (both of Alabama), ProNational Insurance Company and MEEMIC Insurance Company (both of Michigan) remain unaffected. The outlook for all ratings is stable. The shelf offering allows ProAssurance to periodically sell debt securities, common stock and preferred stock with 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). to be used for corporate purposes such as downstreaming funds to its operating insurance subsidiaries or to repurchase outstanding debt securities. A.M. Best believes that the proceeds from the offering will likely be used to facilitate growth within ProAssurance's core medical liability regional markets through either organic expansion or the potential acquisition of existing books of business. As of September 30, 2003, the nine-month quarterly results showed ProAssurance has maintained debt to capital below 20% while generating solid fixed coverage ratios as a result of the group's strong operating performance. Furthermore, ProAssurance's financial flexibility was enhanced as it utilized the proceeds from the July 2003 senior unsecured offering to retire the outstanding balance of $67.5 million bank debt that resulted from the formation of ProAssurance in June of 2001. Should the group draw down additional debt securities from the shelf registration, A.M. Best will assess the impact to the financial leverage and interest coverage at the holding company level. The financial strength ratings of ProAssurance's insurance subsidiaries reflect adequate capitalization at current rating levels, good business position within the group's niche specialty markets and very strong consolidated operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . These positive indicators are further supported by ProAssurance's diverse earnings base within its two insurance segments, professional liability and personal lines. Somewhat offsetting these positive rating factors is ProAssurance's elevated 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. leverage at the operating company operating company A business that engages in transactions with outsiders. level and reduced operating performance due to the recognition of increased loss severity associated with its professional liability segment. ProAssurance did experience improved operating results in 2003, reflective of stronger pricing in its professional liability segment and continued strong operating results from the group's personal lines segment. For a complete 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. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion