A.M. Best Assigns Rating to Protective's New TOPrS Offering; Affirms Financial Strength and Debt Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 21, 2004 A.M. Best Co. has assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. an "a-" rating to the $100 million 6.125% Trust Originated Preferred Securities (TOPrS) issued through a special purpose financing vehicle, PLC Capital Trust V, and guaranteed on a subordinated basis by Protective Life Corporation (Protective) (NYSE NYSE See: New York Stock Exchange : PL) (Birmingham Birmingham, cities, United States Birmingham (bûr`mĭnghăm') 1 City (1990 pop. 265,968), seat of Jefferson co., N central Ala., in the Jones Valley near the southern end of the Appalachian system; founded and inc. , AL). The issuance was made under Protective's $500 million shelf registration previously filed with the Securities & Exchange Commission; there remains $150 million of shelf capacity. Additionally, A.M. Best has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the ratings on the company's existing debt securities. Concurrently, A.M. Best has affirmed the financial strength ratings of Protective's life/health and property/casualty insurance subsidiaries, led by Protective Life Insurance Company (Tennessee Tennessee, state, United States Tennessee (tĕn`əsē', tĕn'əsē`), state in the south-central United States. ), which is currently rated A+ (Superior). All ratings have a stable outlook. The majority of the proceeds will be used to pay down outstanding bank debt, approximately $60 million of which was issued to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. the company's outstanding 7.50% 15-year senior notes on January 1, 2004. The balance of the proceeds will be used for general corporate purposes, affording Protective additional financial flexibility in the future. Protective's financial leverage--total debt plus preferred securities--is approximately 29%. Absent an acquisition, A.M. Best does not expect Protective's debt-to-capital ratio to exceed 30% in the near to medium term. In addition, A.M. Best believes Protective's future earnings will provide strong debt service coverage and enable 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. to remain fairly constant. The ratings reflect the company's consistent earnings growth, diversified diversified (di·verˑ·s revenue and profit sources, solid risk-adjusted capitalization and superior investment performance. The ratings also acknowledge the broad distribution capabilities Protective has developed and its historical success in acquiring and effectively integrating small insurance companies and blocks of business. These acquisitions are largely designed to enhance efficiency through building critical mass in its various business segments. A.M. Best notes that Protective's risk management efforts are driven by an effective asset/liability duration-matching program. The company utilizes a conservative approach by instituting significant call and surrender provisions in almost all of its contracts, significantly reducing earnings volatility. Finally, Protective maintains a high quality investment portfolio, which has experienced a significantly lower level of credit losses and impairments compared with its peers. While these attributes have led to a strong and diverse business profile, they are partially offset by the modest size of some of Protective's businesses and its reliance on products that are becoming more commoditized in nature, subjecting them to competitive pressures. Although Protective maintains revenue and earnings streams that are diversified by distribution source and by product segment, a significant portion of its GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and statutory earnings continues to be generated by its Acquisition and Stable Value Products segments. Despite Protective's demonstrated competencies in these areas, A.M. Best believes both of these operations to be somewhat opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. ; therefore, earnings growth from these divisions may be uneven. Furthermore, Protective remains exposed to future reserve strengthening in its Asset Protection segment due to the soft market for credit insurance and the impact of the current economic environment on used car prices. Nevertheless, the company has taken aggressive actions to improve the performance of this business line. A.M. Best believes management will succeed in restoring its profitability, commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with that of Protective's other segments, in the near to medium term. For a complete list of Protective Life Corporation's debt and financial strength ratings, please visit www.ambest.com/press/012101protective.pdf. For a 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. |
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