LCS.PR.A Downgraded to Pfd-4(low) by DBRS

DBRS has announced that it:

has today downgraded the rating of the Preferred Shares issued by Brompton Lifeco Split Corp. (the Company) to Pfd-4 (low) from Pfd-4 (high).

In April 2007, the Company issued 3.1 million Preferred Shares (at $10 each) and an equal number of Class A Shares (at $15 each). The termination date for both classes of shares issued is April 30, 2014.

The Company holds a portfolio consisting primarily of common shares of the four largest publicly traded Canadian life insurance companies (the Portfolio). As of December 31, 2011, the Portfolio’s composition was: Great-West Lifeco Inc. (27.6%), Manulife Financial Corporation (23.8%), Industrial Alliance Insurance and Financial Services Inc. (23.6%), and Sun Life Financial Inc. (23.2%). The Portfolio was initially equally weighted and is subject to annual rebalancing.

On September 8, 2011, DBRS confirmed the ratings of the Preferred Shares at Pfd-4 (high) due to the sufficient level of downside protection at the time. However, the NAV of the Portfolio experienced significant downward movement over the subsequent months due to the negative performance of Canadian life insurance companies in the third and fourth quarter of 2011. The downside protection available to the Preferred Shares fell from 25.8% on July 28, 2011, to -2.9% on December 29, 2011, and now stands at 10.0% as of March 1, 2012. As a result of the downside protection dropping below acceptable levels for a prolonged period, the rating has been downgraded to Pfd-4 (low).

LCS.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-4(high) in December 2009. LCS.PR.A is not tracked by HIMIPref™.

One Response to “LCS.PR.A Downgraded to Pfd-4(low) by DBRS”

  1. […] was last mentioned on PrefBlog when it was downgraded to Pfd-4(low) by DBRS. LCS.PR.A is not tracked by HIMIPref™ – not only is the Asset Coverage very low, but […]

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