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Mercury General (MCY) Prices Senior Notes Worth $375 Million
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Mercury General Corporation (MCY - Free Report) priced 4.400% $375 million senior notes, which are scheduled to mature in 2027. The notes have been priced at 99.847% of face value.
The company plans to deploy the net proceeds from the offering to repay its outstanding debt, which comprises borrowings under the company’s credit facilities. The remainder of the proceeds, if any, will be used for general corporate purposes.
Following the Federal Reserve’s announcement of an interest rate hike (0.25%) on Dec 14, 2016, which reflected the Fed’s confidence in the improving U.S. economy, the Zacks Rank #4 (Sell) property and casualty (P&C) insurer has been looking forward to further increase in interest rates in the near term. Nonetheless, the company displays its prudence by issuing senior notes amid a still low interest rate environment to procure funds. By capitalizing on the low interest rate environment, the company is attempting to reduce its interest burden, thereby facilitating margin expansion. Also, the company’s operational strength should enable it to service debt uninterruptedly, maintaining its creditworthiness.
As of Dec 31, 2016, notes payable of the company was worth $320 million, up 10.3% from $290 million at the end of 2015. The debt-to-capital ratio at Dec 31, 2016 was 15.4%, up 170 basis points from 13.7% at the end 2015. The latest offering will increase the debt-to-capital ratio by 1300 basis points.
Shares of Mercury General lost 1.58% since the release of fourth-quarter 2016 results, whereas the Zacks categorized Property and Casualty industry gained 4.56%. Nonetheless, we expect robust premium growth and strong capital management to drive the stock higher in the future.
American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Everest Re offers reinsurance and insurance products. The company delivered positive surprises in three of the last four quarters with an average beat of 43.49%.
Selective Insurance provides insurance products and services in the United States. The company delivered a positive surprise in one of the last four quarters but with an average negative surprise of 4.53%.
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Mercury General (MCY) Prices Senior Notes Worth $375 Million
Mercury General Corporation (MCY - Free Report) priced 4.400% $375 million senior notes, which are scheduled to mature in 2027. The notes have been priced at 99.847% of face value.
The company plans to deploy the net proceeds from the offering to repay its outstanding debt, which comprises borrowings under the company’s credit facilities. The remainder of the proceeds, if any, will be used for general corporate purposes.
Following the Federal Reserve’s announcement of an interest rate hike (0.25%) on Dec 14, 2016, which reflected the Fed’s confidence in the improving U.S. economy, the Zacks Rank #4 (Sell) property and casualty (P&C) insurer has been looking forward to further increase in interest rates in the near term. Nonetheless, the company displays its prudence by issuing senior notes amid a still low interest rate environment to procure funds. By capitalizing on the low interest rate environment, the company is attempting to reduce its interest burden, thereby facilitating margin expansion. Also, the company’s operational strength should enable it to service debt uninterruptedly, maintaining its creditworthiness.
As of Dec 31, 2016, notes payable of the company was worth $320 million, up 10.3% from $290 million at the end of 2015. The debt-to-capital ratio at Dec 31, 2016 was 15.4%, up 170 basis points from 13.7% at the end 2015. The latest offering will increase the debt-to-capital ratio by 1300 basis points.
Shares of Mercury General lost 1.58% since the release of fourth-quarter 2016 results, whereas the Zacks categorized Property and Casualty industry gained 4.56%. Nonetheless, we expect robust premium growth and strong capital management to drive the stock higher in the future.
Stocks to Consider
Some better-ranked stocks from the insurance industry include American Financial Group, Inc. (AFG - Free Report) , Everest Re Group, Ltd. and Selective Insurance Group, Inc. (SIGI - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Everest Re offers reinsurance and insurance products. The company delivered positive surprises in three of the last four quarters with an average beat of 43.49%.
Selective Insurance provides insurance products and services in the United States. The company delivered a positive surprise in one of the last four quarters but with an average negative surprise of 4.53%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>