Fitch Assigns 'BBB+' to Great American Financial Resources Debt Issuance.Business Editors CHICAGO--(BUSINESS WIRE)--Jan. 15, 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. has assigned a rating of 'BBB+' to the new $75 million debt issuance from Great American Financial Resources, Inc. (GAFR), this is the same rating as GAFR's outstanding senior debt. The Rating Outlook is Stable. The senior debt issuance has a 30 year maturity, a 5-year 'no call' provision, and carries a fixed interest rate that is expected to be slightly below 7.5%. Proceeds from the new issuance will be used to pay down outstanding trust originated preferred securities (TOPrS), which carried a coupon rate Coupon rate In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year. of 9.25%. Since the TOPrS were given equity credit because of interest deferral features and maturity, GAFR's leverage ratio increases by approximately 3 percentage points. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma debt-to-total capital at GAFR as of December 31, 2003 was 29%, which was consistent with expectations. Fitch calculates this ratio giving 50% equity credit for GAFR's preferred securities and excluding the impact of unrealized gains from 'available for sale' bonds from stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. . GAFR's strength lies in its established niche in the qualified annuity market, which is typified by profitable and persistent business. However, the low interest rate environment has pressured interest spreads and consequently, GAFR's profitability remains well below historic averages. Management at GAFR continues to make moves to address balance sheet strength and has committed to maintain NAIC NAIC See National Association of Investors Corporation (NAIC). 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). at GALIC GALIC Great American Life Insurance Company above 300% of the company action level and manage debt and preferred securities to a level below 30% of total capital. Entity/Issue/Type Action Rating/Outlook Great American Financial Resources, Inc. -- 7.50% Senior notes Assigned 'BBB+'/Stable; -- 7.50% Senior notes No Action 'BBB+'/Stable; -- 6.875% Senior notes No Action 'BBB+'/Stable. American Annuity Group Capital Trust I & II trust -- Preferred securities No Action 'BBB'/Stable. Great American Life Insurance Company -- Insurer financial strength No Action 'A+'/Stable. Loyal American Life Insurance Company -- Insurer financial strength No Action 'A+'/Stable. Annuity Investor Life Insurance Company -- Insurer financial strength No Action 'A+'/Stable. |
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