A.M. Best Rates Protective Life's New Senior Debt Offering.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 15, 2000 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 $60 million of 7.50% fifteen-year senior notes issued by Protective Life Corp. and 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. The sale was made under Protective's $500 million shelf registration previously filed with the Securities & Exchange Commission. The financial strength ratings on Protective's life/health and property/casualty insurance subsidiaries remain unchanged. The proceeds of the $60 million issue will be used primarily to repay outstanding bank debt borrowed under a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. To facilitate the closing of Protective's recently announced acquisition of an individual life block from Standard Insurance Company in early 2001, amounts may be reborrowed under the revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to . Hence, on a temporary basis, Protective's financial leverage--total debt plus preferred stock--will slightly exceed 30%. However, in the near- to medium-term following the completion of the Standard transaction, A.M. Best expects the company's debt-to-capital ratio to decline and remain below 30%. In addition, A.M. Best believes future earnings will provide strong debt service coverage and anticipates Protective's 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, even though the company actively acquires blocks of business as well as 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. The company 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 to market its products. 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 its earnings volatility. The maturity of Protective's primary businesses, in their respective product life cycles, generates seasoned profit margins that further support stable earnings. Offsetting these strengths is Protective's lack of scale in most of its businesses. However, this is largely mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by the group's effective use of technology that allows it to maintain a low-cost administrative structure. In addition, the group's statutory capitalization--statutory surplus to total assets--is below its peer group's average due to a history of sales growth primarily in general account products that require a significant outlay of 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 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. procedures have thus far mitigated this volatility. Protective Life Corp. is a diversified financial-services holding company headquartered in Birmingham, Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. . The company's subsidiaries market life, dental and credit insurance as well as retirement savings and investment products through independent agents, insurance brokers, stockbrokers, financial institutions, automobile dealers and direct response channels.
The following debt rating has been assigned:
- Protective Life Corp.:
- "a+" rating on $60 million 7.50% senior notes due July, 2016
The following ratings on existing debt have been affirmed:
- Protective Life Corp.:
- "a+" rating on $75 million 7.95% senior notes due July, 2004
- "a+" rating on $50 million 8.00% senior notes due July, 2010
- "a+" rating on $40 million 8.10% senior notes due August, 2015
- "a+" rating on $35 million 8.25% senior notes due October, 2030
- PLC Capital Trust I - "a" rating on $75 million 8.25% Trust
Originated Preferred Securities (TOPrS), backed by subordinated
debentures
- PLC Capital Trust II - "a" rating on $115 million 6.50% capital
securities (FELINE PRIDES), backed by subordinated debentures
The following ratings on securities available under a shelf
registration have been affirmed:
- Protective Life Corp.:
- senior unsecured debt rating of "a+"
- subordinated debt rating of "a"
- preferred stock rating of "a"
- PLC Capital Trust III and IV
- preferred stock rating of "a"
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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