Fitch Ratings Affirms Torchmark's 'A+' IDR & 'AA' IFS; Outlook Stable.CHICAGO -- 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 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. Torchmark Corp. (TMK TMK The Mushroom Kingdom (Super Mario Bros video games) TMK Torchmark Corporation (McKinney, TX) TMK Tax Map Key (Hawaii) TMK To My Knowledge ) as follows: --Issuer Default Rating 'A+'; --Senior debt 'A'; --Trust preferred 'A-'; --Commercial Paper 'F1'. Fitch has also affirmed all existing ratings on TMK and its subsidiaries (see list below). The rating affirmation A solemn and formal declaration of the truth of a statement, such as an Affidavit or the actual or prospective testimony of a witness or a party that takes the place of an oath. An affirmation is also used when a person cannot take an oath because of religious convictions. affects approximately $891 million of outstanding public debt as of Dec. 31, 2006. The Rating Outlook is Stable. Fitch has also withdrawn the ratings for Torchmark Capital Trust I and Torchmark Capital Trust II, both of whose outstanding securities have been called. A detailed ratings list follows the end of this release. TMK's rating strengths include good balance sheet fundamentals, a very strong earnings profile, and strong niche market A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. positions in the individual life and supplemental health markets. TMK's balance sheet strengths include it high quality investment portfolio and lower risk insurance products. Financial flexibility is good at the holding company, which issued a 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. security in 2006. Capital levels on the insurance subsidiary level are good but capital quality is somewhat weakened by the use of inter-company financing between TMK and its insurance subsidiaries. Equity-credit adjusted leverage for TMK was approximately 19% at Dec. 31, 2006, below Fitch's maximum expectation of 25%. The strong earnings profile at the insurance subsidiaries is indicated by their high levels of operating return on total adjusted statutory capital and the strong level of statutory dividends available to the TMK holding company. TMK's strong positive cash flows have enabled the company to repurchase large amounts of its common stock averaging approximately $296 million over the last three years. Fitch expects TMK will maintain its fixed-charge coverage fixed-charge coverage The number of times that a firm's operating income exceeds its fixed payments. Fixed-charge coverage is a measure of a firm's ability to meet contractually fixed payments, with high coverage indicating significant flexibility for making above 10 times (x) compared to 2006's strong 11.6x (excluding refinancings). Throughout 2006, TMK has been successful in switching sales emphasis away from Medicare Supplement insurance and towards limited benefit health products to customers under age 65, with only small total sales losses. Additional premium was also added through TMK's participation in the new Medicare Part D drug benefit program, although not at its original projection levels. Recent sales revenue growth at TMK, excluding Medicare Part D, has been slow, except for price increases, as sales momentum declined due to flat to declining life agent counts. Despite lower sales growth, TMK pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. improved 2.6% and 4.7% in 2005 and 2006, respectively. The 2006 improvement mostly reflects the Medicare Part D contribution, but also includes some asset growth and expense control at the holding company. Downward pressure continues to be applied to ratings from mixed success in agent recruiting, slowing new sales growth, lower yields on recent acquisitions of fixed securities backing life insurance reserves (which has resulted in some slight investment margin compression), and competitive pressures in the Medicare supplement market. TMK reported $15 billion in assets and $3.5 billion in shareholders equity at Dec. 31, 2006. Fitch has affirmed the following ratings with a Stable Outlook: Torchmark Corporation --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. ) 'A+'; --Senior debt 'A'; --8.25% senior debentures due 2009 'A'; --7.875% senior notes due 2023 'A'; --7.375% senior notes due 2013 'A'; --6.375% senior debentures due 2016 'A'; --Commercial paper 'F1'. Torchmark Capital Trust III --Preferred stock 'A-'. Liberty National Life Insurance Company United American Insurance Company Globe Life & Accident Insurance Company United Investors Life Insurance Company American Income Life Insurance Company --Insurer financial strength rating at 'AA'/Stable Outlook. Fitch has withdrawn the following ratings: Torchmark Capital Trust I Torchmark Capital Trust II 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. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion