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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - FEBRUARY 11, 2004 12:00 AM (EST)
A.M. Best Co. has assigned debt ratings of "bbb" to Assurant, Inc.'s [NYSE: AIZ] (New York, NY) new $500 million 5.625% 10-year senior notes, due February 2014 and $475 million 6.75% 30-year senior notes, due February 2034. The outlook for the debt ratings is stable.
On February 5, 2004, Assurant, Inc. went public through a $2.024 billion initial public offering. This was the first step in the divestiture plans of Assurant by Benelux-based Fortis, who had previously owned 100% of Assurant. Following the IPO, Fortis owns approximately 35%. Proceeds from the debt offering will be used to replace all existing bridge loans which were used to retire debt tied to Fortis. After the repayment of its outstanding bridge loans, Assurant's debt to capital ratio is expected be approximately 25%, which is an acceptable level for the rating. Prospective fixed charge coverage is expected to be in the range of 5-7 times.
Additionally, all of the financial strength ratings of Assurant, Inc.'s operating insurance subsidiaries are being affirmed. (See complete list of ratings below.) Assurant has established itself as a leading niche writer in various markets through the following business units: Assurant Solutions (specialty property and consumer protection and warranty businesses), Assurant Health (individual and small group health), Assurant Employee Benefits (small group non-medical products such as dental, disability, and group life) and Assurant Preneed (pre-funded funeral insurance).
The diversity of business mix gives Assurant some insulation from the cyclical nature of its businesses. All of its operating insurance units continue to be profitable and are capitalized-on a risk-adjusted basis-in excess of what is expected for their current financial strength ratings. A.M. Best believes the dividending capacity of Assurant's insurance subsidiaries is adequate to cover debt service and holding company expenses.
Some challenges in the coming year include potential margin compression and increasing competition in the individual and small group medical segments (Assurant Health) and adjusting to the evolving credit life and accident market (part of Assurant Solutions). However, A.M. Best notes that Assurant is better positioned than most of its traditional competitors in these markets.
For a complete listing of Assurant, Inc.'s debt and financial strength ratings, please visit Assurant.
For a list of A.M. Best's debt ratings, please visit Best's Debt Rating Center.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.