Correction - Fitch Affirms Ratings of Protective Life Corp. and Subsidiaries.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- (This is a correction for a press release that was issued on April 20, 2007. It contains updated information regarding Protective Life Corporation's medium term loans and Protective Life Secured Trust's FA backed notes.) Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the issuer default rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) of Protective Life Corp. (NYSE NYSE See: New York Stock Exchange :PL) at 'A' and its senior debt ratings at 'A-'. In addition, Fitch has affirmed PL's trust preferred ratings at 'BBB+' and the insurer financial strength (IFS) at 'AA-' and other ratings of PL's life insurance subsidiaries. See a complete list of ratings at the end of this release. The Outlook is Stable. The ratings of PL and its life insurance subsidiaries reflect the group's moderate financial leverage, good coverage and historically stable core earnings. The ratings also recognize PL's strong operating efficiencies, relatively low exposure to interest rate and equity market risk and its strong position in the individual term life market. Fitch's primary concern going forward is PL's dependence on the highly commoditized level term life product, which accounts for a significant percentage of earnings and the majority of new sales. Price competition and increased regulatory reserve requirements Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank. are making it more difficult to operate profitably in this market. Nevertheless, Fitch believes that PL's strong position and extensive experience in the term market and its access to capital market solutions position it well relative to peers. PL's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). profitability is in line with Fitch's expectations for the rating level. The company has historically generated very stable and consistent earnings, with all segments contributing. The group's five-year average net income return on equity was in the 11% range as of year-end 2005. ROE grew to over 13% at year-end 2006 due primarily to a realized investment gain related to the Chase acquisition. 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 are expected to be flat over the near term. Fitch believes that PL's statutory capitalization is adequate for the rating level. The company's risk-based capital (RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). ) ratio declined from 351% in 2005 to 295% at year-end 2006 due primarily to the deployment of capital to fund the Chase acquisition. It is expected to improve to well over 300% by year-end 2007. Equity-adjusted financial leverage at the holding company is moderate at 18.5% as of year-end 2006. Fitch views PL's ability to service debt as sound, with GAAP EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). coverage of interest on long-term senior and subordinated debt in the 7 times (x) range at year-end 2006. EBIT coverage and equity-adjusted financial leverage is expected to remain at current levels over the near term. Fitch affirms the following ratings with a Stable Outlook: Protective Life Corporation: --Issuer Default Rating (IDR) at 'A' --$250 million in senior notes due 2013 at 'A-'; --$150 million in senior notes due 2014 at 'A-'; --Medium term loan due 2011 at 'A-'; --$103 million trust preferred issued through PLC Capital Trust III due 2031 at 'BBB+'; --$119 million trust preferred issued through PLC Capital IV due 2032 at 'BBB+'; --$103 million trust preferred issued through PLC Capital Trust V due 2034 at 'BBB+'; --$200 million Class D Junior Subordinated notes due 2066 at 'BBB+'. --Protective Life Secured Trust FA Backed Notes at 'AA-'. Protective Life Insurance Company --Insurer Financial Strength (IFS) at 'AA-'; Protective Life and Annuity Insurance Company West Coast Life Insurance Company --IFS at 'AA-'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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