A.M. Best has assigned a Long-Term Issue Credit Rating of a- to the $550 million 4.55% senior unsecured notes due Sept. 15, 2028 that were issued by Torchmark Corporation (Torchmark) (headquartered in McKinney, TX ) [NYSE: TMK]. The outlook assigned to the Credit Rating (rating) is negative.
Proceeds from the sale of the senior notes will be utilized primarily for general corporate purposes, including the repurchase of existing debt and to provide additional capital to its operating insurance entities.A.M. Best notes that Torchmarks financial leverage will increase over the near-term to just over 26%, but is expected to decline when the senior notes due 2019 either mature or are redeemed. Additionally, Torchmarks financial flexibility remains strong and interest coverage has remained at just over ten times in recent periods.
Torchmarks ratings recognize its multichannel distribution platform, diverse business mix and very strong operating results. Torchmark has established several market niches and continues to generate consistent revenue and operating earnings across the majority of its core segments, providing ample liquidity to service its debt obligation. However, both risk-adjusted capitalization and the absolute level of capital have generally declined at the insurance operating entities in recent periods. While any proceeds used to boost capitalization will be viewed favorably, A.M. Best will continue to monitor any trends in risk-adjusted capital levels over the near-term.
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