A.M. Best Assigns Ratings to Phoenix Companies' New Senior Notes; Affirms Financial Strength Rating of Phoenix Life and Subsidiaries.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 20, 2001 A.M. Best Co. has assigned an "a" rating to $300 million of 7.45% 30-year senior unsecured bonds Noun 1. unsecured bond - the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future debenture, debenture bond of The Phoenix Companies, Inc. (NYSE NYSE See: New York Stock Exchange : PNX), the holding company for Phoenix Life Insurance Company and its subsidiaries. A.M. Best also assigned an "a" rating to Phoenix Life's $175 million 6.95% surplus notes, issued in 1996. The A (Excellent) group financial strength rating of Phoenix Life and its 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. has been 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 outlook for the rating remains positive. These ratings reflect the company's strong position in the upper-income individual market, enhanced quality and diversity of distribution sources, increasing operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and sound capital position. Further, the company has significantly reduced its risk exposures over the past three years. A significant portion of the proceeds from the issuance of the senior notes will be used to retire $150 million of the company's bank debt; accordingly, the company's leverage will remain modest in the 20% range. Over the last three years, Phoenix has focused its strategy on serving the wealth management needs of the upper income markets--corporate executives, business owners and other wealthy individuals. The company has made significant inroads inroads Noun, pl make inroads into to start affecting or reducing: my gambling has made great inroads into my savings inroads npl to make inroads into [+ in this desirable market in spite of stiff competition from larger competitors with cost advantages and more recognizable brands. Success has stemmed from establishing positions as a favored carrier with a number of distribution organizations with successful track records in serving these markets. The organizations have been attracted by Phoenix Life's array of new product offerings, designed for meeting the special needs of high net worth clients and by providing the organizations with the support and service they most value. Proceeds from the divestitures of several non-core businesses have funded business development and reserve strengthening and augmented an already strong capital position. The company's risk exposure has been significantly reduced with the divestitures of real estate investments and the life reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. business. Risks related to Unicover-originated business have been substantially defeased through bolstering of reserves and the purchase of finite reinsurance Finite Reinsurance A type of reinsurance that transfers over only a finite or limited amount of risk. Risk is reduced through accounting or financial methods, along with the actual transfer of economic risk. . A.M. Best believes Phoenix is well positioned to continue penetrating the high-net-worth market, and that this market strategy has been aided by its status as a public company following its 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 2001. Demutualization is also expected to improve the company's financial flexibility. Offsetting these positive rating factors are the stiff challenges Phoenix faces in penetrating its chosen market. New business growth remains vital to the development of scale, which is important to remaining competitive in the upscale markets. While operating returns have improved considerably, Phoenix's overall earnings continue to be heavily impacted by its participating life business; this business is now a closed block following the demutualization and, as such, has little economic need for capital. A.M. Best has also affirmed the A (Excellent) rating of the following Phoenix subsidiaries: AGL (programming) AGL - (Atelier de Genie Logiciel) French for IPSE. Life Assurance Co., Philadelphia; PHL Variable Insurance Co., Hartford; Phoenix Life and Annuity Co., Hartford; and American Phoenix Life & Reassurance Co., Hartford. The rating reflects the strategic role these companies' have within the Phoenix organization and the financial support and operating benefits derived from the parent. This rating--including the parent's--carries a positive outlook. 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