A.M. Best Assigns Rating to AmerUs Group's New Convertible Security; Affirms Financial Strength Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Mar. 1, 2002 A.M. Best Co. has assigned a "bbb" rating to the $150 million, 30-year Optionally Convertible Equity-linked Accreting Notes (OCEANs) issued by AmerUs Group Co. (NYSE NYSE See: New York Stock Exchange : AMH AMH Abington Memorial Hospital (Abington, PA) AMH Anti-Müllerian Hormone AMH Australian Medicines Handbook AMH Automated Material Handling AMH Aviation Structural Mechanic (Hydraulics) US Navy Rating ) through a private placement offered under Rule 144A Rule 144A A Securities & Exchange Commission rule modifying a two-year holding period requirement on privately placed securities to permit qualified institutional buyers to trade these positions among themselves. . The notes will constitute senior subordinated indebtedness of the company. Approximately $100 million of the proceeds of the offering will be used to repay bank debt; the remainder will be used for stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. . In addition, the A (Excellent) financial strength rating on the group's core life insurance subsidiaries has been affirmed. A.M. Best views the OCEANs as a positive step in providing for a more permanent and conservative capital structure, improving AmerUs Group's financial flexibility. AmerUs Group can defer interest payments up to five years and, in certain circumstances, redeem the OCEANs -- in which case the security holders would most likely convert. The impact on AmerUs Group's fixed charge coverage is slightly positive due to the low cash interest payments and the OCEANs' favorable accounting and tax treatment. A.M. Best expects the company to maintain a total debt -- including preferreds -- to capital ratio in the 25% to 30% range in the near- to medium-term. The ratings reflect the group's solid earnings, diversified product portfolio, expanding distribution, sophisticated 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. and sound capitalization. AmerUs Group's life and annuity businesses have produced steady earnings, which are more than sufficient to cover fixed charges. A significant portion of earnings is generated from its stable block of individual life insurance, which has experienced favorable mortality and persistency. In addition, A.M. Best believes operating results from AmerUs Group's annuity businesses are sustainable due to expansion of controlled distribution, significant conservation efforts and maintenance of spreads. Going forward, the group should benefit from new relationships developed with regional banks and marketing organizations, its existing partnerships as well as sales of new equity indexed life insurance products, which have higher profit margins than traditional life offerings. Although some progress has been made to date, the AmerUs Group will be challenged to fully realize its growth and expense reduction objectives with regard to the integration of the Indianapolis Life companies, which were acquired via sponsored demutualization Demutualization The 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 May 2001. In addition, although new business production has been discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: at IL Annuity due Annuity Due An annuity whose payment is to be made immediately, rather than at the end of the period. Notes: An annuity due requires payments to be made at the beginning of the period. to product persistency problems, the balance of annuity business in other AmerUs Group companies is profitable and within pricing expectations. AmerUs Group Co. is an Iowa corporation engaged through its subsidiaries in the business of marketing and 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. individual life insurance and annuity products in fifty states, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). and the U.S. Virgin Islands. As of December 31, 2001, AmerUs Group reported consolidated assets of $18.3 billion and stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. of $1.2 billion. The following rating has been assigned: AmerUs Group Co.-- - "bbb" rating on $150 million % Optionally Convertible Equity-linked Accreting Notes (OCEANs) senior subordinated convertible notes due 2032 The following ratings on existing debt have been affirmed: AmerUs Group Co.-- - "bbb+" rating on $125 million 6.95% senior notes due June 2005 AmerUs Capital I-- - "bbb-" rating on $68.9 million 8.85% capital securities backed by junior subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before due February 2027 Indianapolis Life Insurance Company-- - "bbb+" rating on $25 million 8.66% surplus notes due April 2011 The following indicative ratings assigned to debt securities available under shelf registration have been affirmed: AmerUs Group Co.-- - "bbb+" senior debt rating - "bbb-" preferred stock rating AmerUs Capital III-- - "bbb-" capital securities rating The following financial strength ratings have been affirmed:
AmerUs Life Insurance Co. A
American Investors Life Insurance Co. A
Delta Life and Annuity Co. A
Indianapolis Life Insurance Co. A
Bankers Life Insurance Company of New York A
IL Annuity and Insurance Co. A
Western Security Life Insurance Co. A
Financial Benefit Life Insurance Co. B+
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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