2008-11-09 07:09:03 -
www.protective.com - Protective Life Corporation ("Protective,") (NYSE: PL) today issued a statement regarding Moody's Investors Service and Fitch Ratings actions related to the company ratings:
Moody's announced today a one-step downgrade of the insurance financial strength (IFS) rating of Protective's life insurance subsidiaries, including Protective Life Insurance Company, to A1 (Good, 5th highest of 21 ratings) from Aa3, as
well as a one-step downgrade of Protective's senior debt rating to Baa1 from A3. Moody's stated that the outlook on all the ratings is stable and this rating action concludes its review of Protective that was begun on October 14, 2008.
Additionally, Fitch Ratings announced a one-step downgrade of its IFS ratings of Protective's life insurance subsidiaries to A+ (Strong, 5th highest of 22 ratings) from AA-, and a one-step downgrade of Protective's issuer default rating to A- from A, with negative outlook.
We believe these reviews were part of a broader review of the life insurance industry in light of the current challenges facing the financial services industry overall. We continue to maintain solid capital ratios with ample liquidity to meet our projected outflows from currently available sources, and we expect that our capital position will strengthen in 2009 in the normal course of business.
We are confident we will address the challenges presented by the current economic environment and continue to be a quality provider of products and services to our customers.
About Protective Life Corporation
Protective Life Corporation provides financial services through the production, distribution and administration of insurance and investment products throughout the United States. It has annual revenues of approximately $3.0 billion and as of December 31, 2007 had assets of approximately $41.7 billion.
FORWARD-LOOKING STATEMENTS
This release includes "forward-looking statements" which express expectations of future events and/or results. All statements based on future expectations rather than on historical facts are forward-looking statements that involve a number of risks and uncertainties, and the Company cannot give assurance that such statements will prove to be correct. The factors which could affect the Company's future results include, but are not limited to, general economic conditions and the following known risks and uncertainties: the Company is exposed to the risks of natural disasters, pandemics, malicious and terrorist acts that could adversely affect the Company's operations; the Company operates in a mature, highly competitive industry, which could limit its ability to gain or maintain its position in the industry and negatively affect profitability; a ratings downgrade or other negative action by a ratings organization could adversely affect the Company; the Company's policy claims fluctuate from period to period resulting in earnings volatility. and actual results could differ from management's expectations, including, but not limited to, expectations of mortality, morbidity, casualty losses, persistency, lapses, customer mix and behavior, and projected level of used vehicle values; the Company's results may be negatively affected should actual experience differ from management's assumptions and estimates which by their nature are imprecise and subject to changes and revision over time; the use of reinsurance, and any change in the magnitude of reinsurance, introduces variability in the Company's statements of income; the Company could be forced to sell investments at a loss to cover policyholder withdrawals; interest rate fluctuations could negatively affect the Company's spread income or otherwise impact its business, including, but not limited to, the volume of sales, the profitability of products, investment performance, and asset liability management; equity market volatility could negatively impact the Company's business, particularly with respect to the Company's variable products, including an increase in the rate of amortization of DAC and estimated cost of providing minimum death benefit and minimum withdrawal benefit guarantees relating to the variable products; insurance companies are highly regulated and subject to numerous legal restrictions and regulations, including, but not limited to, restrictions relating to premium rates, reserve requirements, marketing practices, advertising, privacy, policy forms, reinsurance reserve requirements, acquisitions, and capital adequacy, and the Company cannot predict whether or when regulatory actions may be taken that could adversely affect the Company or its operations; changes to tax law or interpretations of existing tax law could adversely affect the Company, including, but not limited to, the demand for and profitability of its insurance products and the Company's ability to compete with non-insurance products; the Company may be required to establish a valuation allowance against its deferred tax assets, which could materially adversely affect the Company's results of operations, financial condition and capital position; financial services companies are frequently the targets of litigation, including, but not limited to, class action litigation, which could result in substantial judgments, and the Company, like other financial services companies, in the ordinary course of business is involved in litigation and arbitration; publicly held companies in general and the financial services industry in particular are sometimes the target of law enforcement investigations and the focus of increased regulatory scrutiny; the Company's ability to maintain competitive unit costs is dependent upon the level of new sales and persistency of existing business, and a change in persistency may result in higher claims and/or higher or more rapid amortization of deferred policy acquisition costs and thus higher unit costs and lower reported earnings; the Company's investments, including, but not limited to, the Company's invested assets, derivative financial instruments and commercial mortgage loan portfolio, are subject to market and credit risks, and these risks could be heightened during periods of extreme volatility or disruption in financial and credit markets; the Company may not realize its anticipated financial results from its acquisitions strategy, which is dependent on factors such as the availability of suitable acquisitions, the availability of capital to fund acquisitions and the realization of assumptions relating to the acquisition; the Company may not be able to achieve the expected results from its recent acquisition; the Company is dependent on the performance of others, including, but not limited to, distributors, third-party administrators, fund managers, reinsurers and other service providers, and, as with all financial services companies, its ability to conduct business is dependent upon consumer confidence in the industry and its products; the Company's reinsurers could fail to meet assumed obligations, increase rates, or be subject to adverse developments that could affect the Company, and the Company's ability to compete is dependent on the availability of reinsurance, which has become more costly and less available in recent years, or other substitute capital market solutions; the success of the Company's captive reinsurance program and related marketing efforts is dependent on a number of factors outside the control of the Company, including, but not limited to, continued access to capital markets and the overall tax position of the Company; computer viruses or network security breaches could affect the data processing systems of the Company or its business partners, and could damage the Company's business and adversely affect its financial condition and results of operations; the Company's ability to grow depends in large part upon the continued availability of capital, which has been negatively impacted by regulatory action and the volatility and disruption in the capital and credit markets, and may be negatively impacted in the future by an increase in guaranteed minimum death and withdrawal benefit related policy liabilities in variable products resulting from negative performance in the equity markets, and future marketing plans are dependent on access to the capital markets through securitization; and new GAAP and statutory accounting rules or changes to existing GAAP and statutory accounting rules could negatively impact the Company; the Company's risk management policies and procedures may leave it exposed to unidentified or unanticipated risk, which could negatively affect our business or result in losses; credit market volatility or disruption could adversely impact the Company's financial condition or results from operations in several ways, including but not limited to the following: causing market price and cash flow variability in the Company's fixed income portfolio, defaults on principal or interest payments by issuers of the Company's fixed income investments, other than temporary impairments of the Company's fixed income investments; adversely impacting the Company's ability to efficiently access the capital markets to finance its reserve, capital and liquidity needs; difficult conditions in the economy generally could adversely affect the Company's business and results from operations; and there can be no assurance that the actions of the U.S. Government or other governmental and regulatory bodies for the purpose of stabilizing the financial markets will achieve their intended effect. Please refer to Exhibit 99 of the Company's most recent Form 10-K/ 10-Q for more information about these factors which could affect future results.
Protective Life Corporation
Rich Bielen, 205-268-3617
Vice Chairman and Chief Financial Officer
or
Eva Robertson, 205-268-3912
Vice President, Investor Relations
