A.M. Best Rates Protective's New TOPrS Offering.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 20, 2002 A.M. Best Co. has assigned an "a" rating to the $100 million 7.25% Trust Originated Preferred Securities (TOPrS) issued through a special purpose financing vehicle, PLC Capital Trust IV, and guaranteed on a subordinated basis by Protective Life Corporation (NYSE NYSE See: New York Stock Exchange : PL) (Birmingham, AL). The issuance exhausts Protective's $500 million shelf registration previously filed with the Securities & Exchange Commission. The ratings on the company's existing debt securities have 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 financial strength ratings on Protective's life/health and property/casualty insurance subsidiaries are unaffected. Approximately $75 million of the proceeds will be used 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 8.25% TOPrS, issued in 1997 through PLC Capital Trust I, which are backed by an equivalent amount of 30-year 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 at Protective Life Corporation. The balance of the proceeds will be used to pay down outstanding bank debt and for general corporate purposes, affording Protective additional financial flexibility in the future. Protective's financial leverage--total debt plus preferred securities--including the new TOPrS is approximately 29%. A.M. Best expects the company's debt-to-capital ratio to remain within the 25% to 30% range 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, although Protective actively acquires blocks of business and insurance companies through a separate division established for this purpose. The ratings reflect the company's diverse earnings sources and strong operating performance in all business lines. This consistent profitability is a result of Protective's well- managed growth strategy executed by an effective management team. It continues to enhance operating efficiency through use of advanced technology, a decentralized de·cen·tral·ize v. de·cen·tral·ized, de·cen·tral·iz·ing, de·cen·tral·iz·es v.tr. 1. To distribute the administrative functions or powers of (a central authority) among several local authorities. organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. and a diversified diversified (di·verˑ·s network of non-captive distribution channels. A.M. Best notes Protective's risk management efforts are driven by an effective asset/liability duration-matching program. It utilizes a conservative approach by instituting significant call and surrender provisions in almost all of its contracts, significantly reducing earnings volatility. Protective's primary businesses are in the mature phase in their respective product life cycles, enabling them to generate strong and stable earnings. Moreover, the company's 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. expertise and investment capabilities allow it to take advantage of recent equity market volatility through sales of stable value products. Offsetting these strengths is Protective's lack of scale in some businesses. Nevertheless, this issue is largely mitigated by the company's low-cost administrative structure supported by effective use of technology. In addition, Protective's statutory capitalization--statutory surplus to total assets--is below its peer group's average due to its history of sales growth, primarily in general account products that require significant capital. Approximately half of Protective's invested assets are in mortgage-related investments. A.M. Best believes the prepayment risks Prepayment Risk The uncertainty related to unscheduled prepayment in excess of scheduled principal repayment. Notes: This risk is generally associated with mortgage securities. inherent in these interest-sensitive investments expose the company to earnings volatility; however, Protective's prudent 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. strategy and refined asset/liability management procedures have thus far mitigated this volatility.
The following debt rating has been assigned:
-- PLC Capital Trust IV--
-- "a" rating on $100 million 7.25% Trust Originated
Preferred Securities (TOPrS), backed by subordinated
debentures due 2032
The following debt rating has been withdrawn:
-- PLC Capital Trust I--
-- "a" rating on $75 million 8.25% Trust Originated Preferred
Securities (TOPrS), backed by subordinated debentures due
2027
For a list of A.M. Best's current debt ratings, please visit www.ambest.com/ratings/debtrating/companies.html. 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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