A.M. Best Assigns Initial Debt Rating to StanCorp Financial Group Inc.'s Senior Notes.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 20, 2002 A.M. Best Co. has assigned an initial rating of "bbb+" to $250 million 6.875% 10-year senior notes issued by StanCorp Financial Group Inc. (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) ) (Portland, OR) under its $1 billion shelf registration. This rating reflects the company's favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. and consistent profitability over the last several years, established market presence in its core product lines, improved product and geographic diversity, consistent and strong cash flow, solid 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. at the operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. and a conservative level of financial leverage expected over the medium term. Approximately $75 million of the proceeds are expected to fund the acquisition of a block of group long-term disability and group life insurance contracts and reserves. Additionally, approximately $130 million will be used to capitalize To regard the cost of an improvement or other purchase as a capital asset for purposes of determining Income Tax liability. To calculate the net worth upon which an investment is based. To issue company stocks or bonds to finance an investment. the acquired block at 275% of the NAIC NAIC See National Association of Investors Corporation (NAIC). company action level. The remainder will be used for general corporate purposes. This acquisition is expected to improve StanCorp's existing market share position in both disability and group life segments. A.M. Best expects financial leverage and debt service coverage to remain under 25% and at seven to ten times, respectively. Favorable cash flow at StanCorp's principal insurance company, Standard Insurance Company (Portland, OR), permits a high level of dividends, which provides ample support for the debt service. It is anticipated that continuation of favorable earnings will contribute to debt servicing requirements. These strengths are partially offset by the general vulnerability of virtually all of StanCorp's business lines to the economy and large exposure to investments in commercial mortgages. A.M. Best believes further weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. in the economy or a change in the interest
rate environment could have a potential negative impact on
StanCorp's gain from its disability business as well as investment
income from its mortgage portfolio.
The following senior debt rating has been assigned:
StanCorp Financial Group, Inc.--
-- "bbb+" to $250 million 6.875% 10-year senior notes, due 2012
The following ratings of the $1 billion shelf registration remain
unchanged:
StanCorp Financial Group, Inc.--
-- "bbb+" senior debt rating
-- "bbb" subordinated debt rating
The financial strength rating of A (Excellent) remains unchanged
for the following subsidiaries of StanCorp Financial Group Inc.:
-- Standard Insurance Company
-- Standard Insurance Company of New York
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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