Fitch Rates Nationwide Financial Service's Sr Debt Due 2012 'A+'.Business Editors 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 'A+' to the $300 million senior debt offering from Nationwide Financial Service, Inc. (NFS (Network File System) The file sharing protocol in a Unix network. This de facto Unix standard, which is widely known as a "distributed file system," was developed by Sun. See file sharing protocol and WebNFS. NFS - Network File System ). The Rating Outlook is Stable. The debt matures in 2012, is unsecured, non-callable, and carries a 5.90% interest rate. Proceeds from the issuance will be used in the acquisition of Provident Mutual Life Insurance Company (Provident Mutual), which is expected to take place late in the third quarter 2002. Fitch currently rates the existing senior debt and trust preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. of NFS 'A+' and 'A', respectively. In addition, Fitch rates the commercial paper program of Nationwide Life Insurance Co. 'F1'. Fitch also maintains a 'AA' insurer financial strength rating on Nationwide Mutual Insurance Co. (Nationwide Mutual) and related pool members. The rating of Nationwide Mutual is currently on Negative Rating Outlook due to concerns over increased leverage, progress in turning around poor operating results, and deterioration in surplus. Failure of Nationwide Mutual to make progress in operating results would place downward pressure on its ratings. NFS is a major stock life insurance company with operations in individual annuity, pension and individual life insurance, which is approximately 81% owned by Nationwide Mutual. Nationwide Mutual is one of the largest property/casualty companies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , and carries a solid personal lines franchise with name-brand recognition and a large and high-quality distribution channels. NFS will acquire Provident Mutual through a sponsored demutualization Demutualization The process of changing corporate structure from a mutual fund company to some other form, such as a limited liability or corporation. Notes: This means mutual/life insurance companies convert from policyholder companies to stock companies. in the third quarter of 2002. The purchase price of $1.53 billion will be financed 75% by common stock and 25% with cash and policyholder credits. NFS will issue common stock related to the Provident Mutual transaction during the third quarter of 2002, resulting in a dilution of Nationwide Mutual's ownership to approximately two-thirds. Although not wholly owned, Fitch considers NFS to be a strategic operation for Nationwide Mutual, and does not anticipate Nationwide Mutual relinquishing control of NFS. NFS' 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 the close of the first quarter 2002 was 23.1%, which remains consistent with management's plan to maintain leverage below 25%. The ratio excludes unrealized gains from available-for-sale fixed income securities, and provides one-half equity credit for the company's $300 million in trust preferred securities. Fitch expects NFS' leverage ratio to be reduced to below 20% after it issues common stock related to the Provident Mutual acquisition. NFS' annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. covers fixed charges on both existing and newly issued debt and preferred securities by nearly 8 times (x), which is very good. Entity/Issue/Type Action Rating/Outlook Nationwide Financial Services Inc. --Senior notes due 2011 Assigned 'A+'/Stable. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion