NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns a rating of BBB- with a Stable Outlook to $60 million of senior unsecured notes issued by WT Holdings, Inc. (WT Holdings). WT Holdings is a privately held, Memphis, TN based holding company with insurance operations in Jacksonville, FL, Jericho, NY, and Mayfield Heights, OH. On March 2, 2018, WT Holdings was assigned an issuer rating of BBB- with a Stable Outlook.
KBRA expects WT Holdings to use the proceeds of the offering to repay its outstanding bank loan of $43.0 million and for general corporate purposes, including supporting the organic growth of its insurance subsidiaries. The notes have a fixed coupon of 7% and mature on April 30, 2023. Financial leverage following the issuance will be roughly 31%. KBRA expects WT Holdings to maintain financial leverage at or below this level in the near to medium term. Interest and cash coverage are sound through regulated dividends from its operating companies and unregulated dividends through its wholly owned agency. Healthy risk-adjusted capital ratios are being maintained at the operating companies -- Stillwater, Tri-State and Evergreen -- which have had strong dividend capacity over the last five years.
The notes will be WT Holdings’ senior unsecured and unsubordinated debt obligations and will rank equally in right of payment with all of WT Holdings’ future unsecured and unsubordinated indebtedness, and will rank senior in right of payment to any future indebtedness that is subordinated to the notes. The notes will be effectively subordinated to any future secured indebtedness of WT Holdings to the extent of the value of the collateral securing such indebtedness.
The Stable Outlook reflects KBRA’s expectation that WT Holdings will continue to successfully execute its business strategies by maintaining sound capitalization at the operating subsidiaries, sustaining profitability with conservative underwriting leverage, continuing to manage risk in a prudent manner, and maintaining judicious financial leverage and sound coverage metrics.
The ratings are based on KBRA’s Global Insurer & Insurance Holding Company Rating Methodology, published on October 10, 2017.
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