Rating agency A.M.Best has conferred a rating of “a-” on senior debt, “bbb+” on subordinated debt and “bbb” on preferred stock of the recently filed shelf registration of Torchmark Corp. (TMK).
Shelf registration is a process authorized by the U.S. Securities and Exchange Commission that allows companies to file a single registration document permitting the issuance of multiple securities. Shelf registration refers to the registration of a new issue, which can be prepared in advance for up to three years, so that the issue can be offered quickly as soon as funds are needed or market conditions are favorable.
The rating agency also provided an indicative rating of “bbb” to the preferred securities, which may come out under the company’s current shelf registration.
The rating agency acknowledges Torchmark’s strong business fundamentals and its niche presence in life and supplemental health businesses. Its leverage ratio stands at 22.9%, which falls within the rating agency’s comfort level. A.M. Best is also confident about the company’s ability to pay off its interest obligations as reflected by its fixed interest coverage ratio of 9.4x.
Earlier the rating agency had affirmed the financial strength ratings (“FSR”) and the issuer credit ratings (“ICR”) of Torchmark and its subsidiaries. Torchmark's subsidiaries have been assigned an FSR of "A+" and an ICR of "aa-," while the holding company has been conferred with an ICR of "a-," along with its existing debt ratings. All the ratings hold a stable outlook.
A.M. Best took into account Torchmark's solid market presence as well as a broad product profile that offers annuities, whole and term life insurance, accidental death insurance, health insurance, Medicare supplements, and long-term health care policies. Torchmark makes these offerings through its subsidiaries Liberty National Life, American Income Life Insurance, United Investors Life Insurance, United American Insurance and Globe Life and Accident Insurance.
Torchmark also scores strongly with other rating agencies. Last month, Fitch Ratings confirmed its insurer financial strength (“IFS”) rating of ‘A+’ and ICR of ‘A-.‘ The ratings carried a stable outlook.
Peer Assurant Inc. (AIZ) also carries an ICR of “bbb” with a stable outlook by A.M.Best. Torchmark 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 Report
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