A.M. Best has assigned a debt rating of “a” to the recently
issued CAD 250 million 2.64% subordinated debentures due Feb. 23, 2027
of Industrial Alliance Insurance and Financial Services Inc. (IA)
(Quebec City, Quebec) (TSX:IAG). The outlook assigned 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. 13, 2015.)
The proceeds from the debt offering will be added to IA’s capital base
and be utilized for general corporate purposes, including the redemption
of IA’s outstanding CAD 100 million 5.90% Non-Cumulative Class A
Preferred Shares Series F. IA intends to redeem the preferred shares on
March 31, 2015. 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 year-end 2014, IA reported solid
operating earnings, while maintaining adequate risk-adjusted capital
ratios. Premium growth for the year was led by strong individual
insurance sales. Additionally, the company saw improvement in their
segregated funds business. A.M. Best will continue to monitor the impact
of the current macroeconomic environment, including interest rate
movements on IA’s earnings and risk-adjusted capital.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
• Equity Credit for Hybrid Securities
• Insurance Holding Company and Debt Ratings
This press release relates to rating(s) 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 visit A.M. Best’s Ratings
& Criteria Center.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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