View this article online: https://www.insurancejournal.com/news/west/2003/01/29/25751.htm
Moody’s Investors Service has assigned Baa1 ratings to two issues of senior unsecured debt of SAFECO Corporation and has affirmed the company’s ratings with a stable outlook.
Moody’s assigned its Baa1 rating to SAFECO Corp.’s issuance of $200 million 4.20 percent 5-year senior notes and $300 million 4.875% 7-year senior notes. Moody’s noted that it expects SAFECO will use the proceeds from the senior debt offering to repay $300 million of medium-term notes due March 15, 2003, and to call up to $200 million of medium-term notes maturing in April 2005.
Moody’s remarked that the issuance represented a draw down on SAFECO’s recently replenished universal shelf filing, of which $275 million remains after the draw down. The rating agency noted that SAFECO’s most recent universal shelf filing restored shelf capacity utilized during 2002. In Aug. 2002, SAFECO issued $375 million of 10-year senior notes, using the proceeds to repay its commercial paper borrowings and other medium-term notes. Then, in Nov. 2002, SAFECO raised $329 million through the issuance of 10.5 million new common shares, contributing $250 million into its insurance operations to support growth.
Moody’s explained that the rating affirmation and stable outlook reflect the rating agency’s view that SAFECO’s actions since 2001 – to focus on its core strengths and to re-underwrite its property-casualty business – should continue to improve operating results. This is balanced by SAFECO’s financial leverage position, which will constrain organic capital growth in the short-term.
The following ratings have been affirmed with a stable outlook:
SAFECO Corporation – senior unsecured debt at Baa1, prospective senior unsecured debt at (P)Baa1, prospective subordinated debt at (P)Baa2, prospective preferred stock at (P)Baa3;
SAFECO Capital Trust I – capital securities at Baa2;
American Economy Insurance Co. – insurance financial strength at A1;
American States Insurance Co. – insurance financial strength at A1;
American States Preferred Insurance Co. – insurance financial strength at A1;
First National Insurance Co. of America – insurance financial strength at A1;
General Insurance Co. of America – insurance financial strength at A1;
Safeco Insurance Co. of America – insurance financial strength at A1;
Safeco Insurance Co. of Illinois – insurance financial strength at A1;
Safeco National Insurance Co. – insurance financial strength at A1;
Safeco Life Insurance Co. – insurance financial strength at A1.