Fitch Affirms Jefferson-Pilot Corporation Ratings Following Acquisition Announcement.Business Editors NEW YORK--(BUSINESS WIRE)--Jan. 14, 2004 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. today 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. all ratings for Jefferson Pilot Corporation (JPC JPC Joint Parliamentary Committee (India) JPC John Paul College (Queensland, Australia) JPC Joint Propulsion Conference JPC Joint Planning Committee JPC Jpeg-2000 Code stream ) and its life insurance subsidiaries following today's announcement of the planned acquisition of Canada Life's U.S. group life, disability and dental business. The Rating Outlook for all ratings is Stable. A complete list of ratings follows at the end of this release. The acquisition, which will be structured as a 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. transaction, requires JPC to make a commitment of approximately $200 million to support the business. Fitch fitch: see polecat. believes that JPC has ample capacity to support the acquisition, which will be financed with term debt. Fitch expects leverage to remain below 20% and fixed charge coverage to remain above 18x on a pro-forma basis. Fitch believes that the acquisition is a good fit with JPC's existing group business, which is geared toward smaller and mid-sized companies. The Canada Life block will add about $350 million to JPC's inforce premium in this segment, bringing the total to over $1 billion, and it will strengthen distribution capacity. The combined business is expected to increase the contribution to earnings of JPC's Benefit Partners segment from about 9% in 2003 to 15% in 2005. Fitch believes that JPC's demonstrated ability to integrate acquisitions and manage expenses is a significant positive factor. JPC's very strong ratings reflect the group's moderate financial leverage, stable operating performance in a difficult environment, good expense management and good GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). profitability. Weighed against these positives is JPC's exposure to interest rate risk through its concentration in interest sensitive products. JPC's adjusted financial leverage, which was less than 15% at Sept. 30, 2003, is modest by industry standards. In addition, the holding company has strong liquidity as a result of cash flow and investments available from non regulated subsidiaries. JPC is a publicly traded corporation based in Greensboro, N.C. It had total GAAP assets of $32 billion and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $3.8 billion at Sep 30, 2003. The company has four primary business lines: individual life insurance, annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. and investment products, group insurance, and communications. Entity/Issue/Type/Action/Rating/Outlook Jefferson-Pilot Corporation -- Long-term rating affirmed 'AA-'/Stable; -- Short-term rating Affirmed at 'F1+'; -- Commercial paper rating Affirmed at 'F1+'. Jefferson-Pilot Capital Securities -- Capital securities affirmed 'A+'/Stable. Jefferson-Pilot Life Insurance Co. -- Insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. financial strength rating affirmed 'AA+'/Stable. Jefferson Pilot Financial Insurance Co. -- Insurer financial strength rating affirmed 'AA+'/Stable. Jefferson Pilot LifeAmerica Insurance Co. -- Insurer financial strength rating affirmed 'AA+'/Stable. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion