Back to top

Analyst Blog

Standard and Poor’s Ratings Services (S&P) recently assigned a “BBB” rating on Protective Life Corporation’s (PL - Analyst Report) newly issued subordinated debt worth $150 million. Fitch Ratings also provided a “BB+” rating on the debt, while Moody’s rated it “Baa3” with a stable outlook.

S&P has rated the subordinated debt two notches below Protective Life’s issuer credit rating as the debt is subordinate to the company’s senior debt and also bears a 5-year deferral option. Concurrently, the rating agency affirmed its counterparty credit rating for Protective Life at “A-” with a stable outlook.

Protective Life is issuing 6% subordinated debt worth $150 million due 2042 to redeem its outstanding callable hybrid capital securities maturing on 2066. However, the debt issuance will not increase the company’s total debt and this prevented the assignment of lower ratings on the debt.

Prior Rating Action

Earlier this week, Fitch had affirmed its commercial mortgage-backed securities (“CMBS”) primary servicer rating of "CPS3+”, master servicer rating of "CMS3”, and special servicer rating of "CSS3+” on Protective Life Insurance Company, an operating subsidiary of Protective Life. 

Previously, in May 2012, the rating agency affirmed the issuer default rating of Protective Life Insurance Company at “BBB+” and insurer financial strength rating at “A” with a stable outlook.

Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor confidence on the stock as well as maintaining creditworthiness in the market.  We believe strong ratings scores will help it to write more businesses going forward, thereby augmenting the results.

Peer Ratings

Protective Life’s peer, Reinsurance Group of America Inc. (RGA - Analyst Report) also witnessed rating affirmation from A.M. Best Co. earlier this week. The rating agency affirmed the company’s debt rating of "bbb+" with a stable outlook. The rating follows the company’s recent issue of 6.2% fixed-to-floating subordinated debentures worth $400 million, slated to mature in 2042.

Zacks Rank

Protective Life carries a Zacks #3 Rank, which translates into a short-term Hold rating.

Please login to Zacks.com or register to post a comment.