{"id":21159,"date":"2013-02-21T00:11:40","date_gmt":"2013-02-21T04:11:40","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=21159"},"modified":"2013-02-21T00:11:40","modified_gmt":"2013-02-21T04:11:40","slug":"iag-issues-common-sp-revises-outlook-to-stable","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=21159","title":{"rendered":"IAG Issues Common; S&P Revises Outlook To Stable"},"content":{"rendered":"

Industrial Alliance Insurance and Financial Services Inc. has announced<\/a> that it:<\/p>\n

has today entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and BMO Capital Markets, pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 6,000,000 Common Shares (the “Common Shares”) from Industrial Alliance for sale to the public at a price of $37.50 per Common Share, representing aggregate gross proceeds of $225 million.<\/p>\n

The Company has also granted the underwriters an option to buy up to an additional $25 million of the Common Shares at the same price per share to cover over-allotments, if any.<\/p>\n

This share offering is expected to close on or about February 27, 2013, subject to certain conditions including approval from the Toronto Stock Exchange. The net proceeds of approximately $216 million, after deducting underwriting commissions and before issuance costs, will be used to redeem all of the outstanding 8.25% subordinated debentures due March 27, 2019 (the “Subordinated Debentures”) with a nominal value of $100 million and to redeem all of the Industrial Alliance Trust Securities (“IATS”) – Series A (the “IATS – Series A”) with a nominal value of $150 million. Following closing of this offering, Industrial Alliance intends to issue a redemption notice to redeem the Subordinated Debentures on or about March 29, 2013 and to issue the necessary notice to redeem the IATS – Series A on June 30, 2013. The Subordinated Debentures and the IATS – Series A will be redeemed for a consideration determined in accordance with their respective terms.<\/p>\n

According to the Company\u2019s financial information as at December 31, 2012, an issue of $225 million of Common Shares, if the abovementioned redemptions are taken into account, would reduce the debt ratio from 18.5% to 12.4% if only the debentures and the IATS are considered debt, and from 35.2% to 29.3% if preferred shares are also considered debt. The solvency ratio, which stood at 217% as at December 31, 2012 (230% as at January 1, 2013), would decline by about two percentage points, but would remain unchanged if the full $25 million over allotment option were exercised. The Company maintains its guidance for 2013 provided on February 15, 2013.<\/p><\/blockquote>\n

As a result, S&P has announced<\/a>:<\/p>\n

\n
    \n
  • \u2022Industrial Alliance Insurance and Financial Services Inc. will issue up to C$250 million in common shares to retire C$250 million in debentures and trust securities.\n
  • \u2022We are revising our outlook on the company to stable from negative and affirming all ratings.\n
  • \u2022We expect leverage to drop to approximately 29% and fixed-charge coverage to increase to 6x.<\/ul>\n

    …<\/b>
    The capital raise reflects the company’s exposure to the current low interest rate environment primarily through its relatively large exposure to long-duration individual life insurance products and the fair-value treatment that these liabilities receive under Canadian International Financial Reporting Standards and Canadian regulatory capital rules. Management has taken a number of proactive steps to strengthen its capital position, including de-risking and re-pricing products to reduce capital strain, selling capital-intensive businesses, and successfully negotiating the capital requirements underlying the lapse assumptions for retail insurance with Canadian regulators.<\/p>\n

    The outlook is stable. We could downgrade the company if leverage exceeds 35% and if its fixed -charge coverage falls to less than 5x. Alternatively, we could consider raising the rating on the company if it were able to reduce leverage meaningfully and increase fixed-charge coverage to 8x.<\/p><\/blockquote>\n

    IAG has several preferred share issues outstanding: IAG.PR.A, IAG.PR.E & IAG.PR.F, DeemedRetractibles, and IAG.PR.C & IAG.PR.G, FixedResets. All are tracked by HIMIPref™ all are assigned to their respective indices.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Industrial Alliance Insurance and Financial Services Inc. has announced that it: has today entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and BMO Capital Markets, pursuant to which …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-21159","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/21159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21159"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/21159\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}