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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 16, 2016 01:57 PM (EDT)
A.M. Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “a” to the recently issued CAD 400 million 3.3% subordinated debentures due Sept. 15, 2028, of Industrial Alliance Insurance and Financial Services Inc. (IA) (Quebec City, Quebec) [TSX: IAG]. The outlook assigned to this Credit Rating (rating) is stable, which is consistent with the outlook for the existing ratings of IA and its core operating insurance subsidiaries. (For further details, please see A.M. Best’s press release dated Feb. 24, 2016.)
The proceeds from the debt offering will be added to IA’s capital base and be utilized for general corporate purposes, including, subject to the prior approval of the Autorité des marchés financiers, the redemption of IA’s outstanding CAD 250 million 4.75% Subordinated Debentures due Dec. 21, 2021. IA intends to redeem the subordinated debentures on Dec. 14, 2016. A.M. Best notes that IA’s overall financial leverage is expected to remain below 30%, while interest coverage is expected to remain above five times. Both measures are within A.M. Best’s guidelines for IA’s current rating level.
The rating recognizes IA’s solid absolute and risk-adjusted capitalizations, consistent profitability, product diversification and growth in assets under management. At 2Q 2016, IA reported solid operating earnings, while maintaining adequate risk-adjusted capital ratios. Premium growth for the period was led by strong retail insurance sales in Canada and the United States. Additionally, the company saw improvement in their new business strain ratio. A.M. Best will continue to monitor the impact of the current macroeconomic environment, including the low interest rate environment on IA’s earnings and risk-adjusted capital.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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