A.M. Best Assigns Issuer Credit and Debt Ratings to Sammons Financial Group, Inc.
October 23, 2013 by Best's News Service
OLDWICK, N.J. – A.M. Best Co. has assigned an issuer credit rating of “a-” and a debt rating of “a-” to the $200 million 7.0% 30-year senior unsecured notes issued by Sammons Financial Group, Inc. (SFG, Inc.) (Delaware), an intermediate holding company indirectly owned by Sammons Enterprises, Inc. (SEI). The outlook assigned to both ratings is stable. All other ratings of SEI and its subsidiaries are unchanged.
The proceeds from this debt issuance are expected to be used for general corporate purposes, including financing business growth at SFG, Inc.’s two insurance operating subsidiaries—Midland National Life Insurance Company (Midland National) and North American Company for Life and Health Insurance (North American Company). As this is SFG Inc.’s initial issuance of external debt, its financial leverage and interest coverage are both well within A.M. Best’s guidelines for its current ratings. A.M. Best notes that SFG Inc.’s insurance subsidiaries currently maintain above-average levels of cash resources.
SFG Inc.’s ratings reflect the profitability and liquidity at its operating subsidiaries, which collectively account for substantially all of its assets and stockholders’ equity. At year-end 2012, the statutory capital and surplus of Midland National and North American Company were approximately $2.1 billion and $977 million, respectively. The ratings also reflect the private, employee stock ownership plan-owned organizational structure, the enterprise’s focus on expense control and the profitable nature of its core insurance and annuity businesses.
Partially offsetting these positive rating factors are SFG Inc.’s exposure to the ongoing low interest rate environment and its impact on interest-sensitive liabilities, above-average holdings of real estate-related assets and the ongoing need for Regulation XXX financing.
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 http://www.ambest.com/ratings/methodology. BN-NJ-10-22-2013 1636 ET #
