A.M. Best Assigns Initial Debt Ratings to StanCorp Financial Group Inc.'s New Shelf Registration.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--July 19, 2002 A.M. Best Co. has assigned indicative ratings of "bbb+"senior debt and "bbb"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". to securities that may be issued under StanCorp Financial Group Inc.'s, (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, Oregon, proposed $1 billion shelf registration. The ratings reflect 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. StanCorp has grown to become a leading writer of group long-term disability and group life insurance in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Supplemented by carefully selected acquisitions, growth has come mainly from the expansion of its marketing across the nation. In September 2002, the company expects to close on the proposed acquisition of a block of group long-term disability and group life insurance contracts and reserves, which will improve StanCorp's existing market share position in both segments. StanCorp anticipates funding the acquisition for $75 million and the block's capitalization at $128 million, with a $250 million issue of senior debt drawn down from the shelf registration. Over the medium term, A.M. Best expects financial leverage and debt service coverage to remain under 25% and at 8 to 10 times, respectively. Favorable cash flow at StanCorp's principal insurance company, Standard Insurance Company, Portland, Oregon, permits a high level of dividends, which provides ample support for the debt service. Over the last several years, including those of economic downturn, earnings from the Employee Benefits segment have been consistently favorable with the company's core disability business performance remaining good. It is anticipated that the 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 negatively impact StanCorp's gain from its
disability business as well as investment income from its mortgage
portfolio. However, StanCorp's track record of good performance and
improved financial flexibility since its demutualization DemutualizationThe process of changing corporate structure from a mutual fund company to some other form, such as a limited liability or corporation. Notes: This means mutual/life insurance companies convert from policyholder companies to stock companies. in 1999 lends some comfort. The financial strength rating of A (Excellent) remains unchanged for the following companies: -- Standard Insurance Company -- Standard Insurance Company of New York The following ratings have been assigned to the $1 billion shelf registration: StanCorp Financial Group, Inc.-- -- "bbb+"senior debt rating -- "bbb"subordinated debt rating 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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