) newly issued $300 million worth of 3.58% Senior Notes, which will
mature in 2022, have been assigned with an 'a-' rating by A.M.
Best. Simultaneously, the newly issued 5.875% $125 million junior
subordinated debentures with maturity scheduled in September 2052
were allotted debt rating of 'bbb.'
The rating agency has left unchanged Insurer Financial Strength
Issuer Credit and existing debt ratings of the parent and its
The rating carries a stable outlook. A stable outlook
indicates that a company is experiencing steady financial as well
as market trends, and the company's ratings are not likely to
change over an intermediate period.
Torchmark will use nearly $200 million from the proceeds to fund
the proposed acquisition of Family Heritage Life Insurance Company
of America. The acquisition was announced last month and is
expected to close by the fourth quarter of 2012.
The remaining funds from the Senior Notes offering will be
utilized for meeting the working capital requirements, which
include discharging of the $94.1 million in principal amount
outstanding of the company's 7.375% Notes maturing on August 1,
2013. On the other hand, the proceeds from the Junior Subordinated
Notes will be used to redeem all of the $120 million of 7.10% Trust
Originated Preferred Securities, maturing in 2046.
The ratings outlook by A.M. Best takes into account Torchmark's
niche position in the market as a provider of supplemental and
health insurance products. The company has consistently shown
favorable performance and its investment results are also
According to A.M. Best, the company's has healthy near-term
prospects and its financial leverage will remain below 30% with
interest coverage above 9x. Both these metrics are in line with the
current ratings requirement. The debt to capital ratio was
23.6% as of June 30, 2012, and the interest coverage was 10.1x.
Recently, Standard & Poor's has assigned senior unsecured
debt rating of 'A' to senior unsecured notes due in 2022, and
'BBB+' to junior subordinated debt due in 2052. Also, Moody's Corp.
(MCO) has rated Torchmark's senior debt with 'Baa1' and junior
subordinated debt with 'Baa2'.
Fitch has assigned a 'BBB+' to senior unsecured notes whereas
the junior subordinated debentures have been given 'BBB-'
Torchmark competes with
) and currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We are also maintaining our long-term
'Neutral' recommendation on its shares.
ASSURANT INC (AIZ): Free Stock Analysis Report
TORCHMARK CORP (TMK): Free Stock Analysis
To read this article on Zacks.com click here.