May 24, 2017 / 2:58 PM / 3 years ago

Fitch Expects to Rate Great-West Lifeco Finance LP's Senior Notes 'A'

(The following statement was released by the rating agency) NEW YORK, May 24 (Fitch) Fitch Ratings expects to assign an 'A' rating to Great-West Lifeco Finance (Delaware) LP's USD700 million 4.15% senior notes due 2047, which are anticipated to close on May 26, 2017. KEY RATING DRIVERS The rating assigned is equivalent to the rating on Great-West Lifeco's senior notes, as the debt is fully and unconditionally guaranteed by Great-West Lifeco. Fitch expects a portion of the proceeds will be used for a debt redemption in June, and the remainder will be used for general corporate purposes. Fitch expects pro forma leverage following the debt issuance and redemption to be 19%. Fitch affirmed the ratings of GWO and its insurance operating subsidiaries with a Stable Outlook on March 17, 2017. For more, details, See Fitch's press release at RATING SENSITIVITIES Key rating triggers for GWO's ratings that could lead to a downgrade include: --A sustained drop in the company's risk-adjusted capital position evidenced by MCCSR ratios falling below 200% and no change in view of capital under the LICAT framework. --Increase in financial leverage to over 25% or an increase in total leverage to over 35%. --Decline in fixed charge coverage to less than 6x. --Sizable goodwill impairment on Canada Life, London Life or Irish Life acquisitions. --Acquisitions outside GWO's historical risk preferences or expertise, or any other material changes in the company's risk appetite. --Reduction in Power Financial Corporation's ownership stake in GWO. Key rating triggers for GWO's ratings that could lead to an upgrade include: --Significant improvement in Putnam's earnings to a level on par with GWO's other operating subsidiaries; --Decline in financial leverage to below 15% and a decline in total leverage to below 25%. FULL LIST OF RATING ACTIONS Fitch has assigned the following expected rating: Great-West Lifeco Finance (Delaware) LP --USD700 million 4.15 % Senior Notes due 2047 'A (EXP)' Fitch currently rates the GWO entities as follows: Great-West Lifeco, Inc. --Long-term Issuer Default Rating (IDR) 'A+'; --6.14% senior debentures due March 21, 2018 'A'; --4.65% senior debentures due Aug. 13, 2020 'A'; --6.74% senior debentures due Nov. 24, 2031 'A'; --6.67% senior debentures due March 21, 2033 'A'; --5.998% senior debentures due Nov. 16, 2039 'A'; --2.5% Euro bond debt due April 18, 2023 'A'; --1.75% Euro bond debt due Dec. 7, 2026 'A'; --Series F, 5.9% non-cumulative first preferred shares 'BBB+'; --Series G, 5.2% non-cumulative first preferred shares 'BBB+'; --Series H, 4.85% non-cumulative first preferred shares 'BBB+'; --Series I, 4.5% non-cumulative first preferred shares 'BBB+'; --Series L, 5.65% non-cumulative first preferred shares 'BBB+'; --Series M, 5.80% non-cumulative first preferred shares 'BBB+'; --Series N, 2.176% non-cumulative first preferred shares 'BBB+'; --Series O, Floating Rate non-cumulative first preferred shares 'BBB+'; --Series P, 5.4% non-cumulative first preferred shares 'BBB+'; --Series Q, 5.15% non-cumulative first preferred shares 'BBB+'; --Series R, 4.8% non-cumulative first preferred shares 'BBB+'; --Series S, 5.25% non-cumulative first preferred shares 'BBB+' --Series T, 5.15% non-cumulative first preferred shares 'BBB+'. GWL&A Financial Inc. --Long-term IDR 'A+'. Canada Life Financial Corporation --Long-term IDR 'A+'. Great-West Life Assurance Company --Insurer Financial Strength (IFS) 'AA'; --Long-term IDR 'AA-'. Canada Life Assurance Company --IFS 'AA'; --Long-term IDR 'AA-'; --6.4% subordinated debentures due Dec. 11, 2028 'A+'. Great-West Life and Annuity Insurance Company --IFS 'AA'; --Short-term IDR 'F1+'; --Commercial paper 'F1+'. London Life Insurance Company; Great-West Life and Annuity Insurance Company of New York --IFS 'AA'. Irish Life Assurance plc --IFS 'AA'; --Long-term IDR 'AA-'. Canada Life International Re Ltd. --IFS 'AA'. Great-West Life & Annuity Insurance Capital, LP II --2.538% fixed rate plus three-month LIBOR subordinated debentures due 2046 'BBB+'. Canada Life Capital Trust --Series B, 7.529% senior debentures due June 30, 2052 'A'. Great-West Life & Annuity Insurance Capital, LP --6.625% deferrable debentures due Nov. 15, 2034 'BBB+'. Great-West Lifeco Finance (Delaware) LP --5.691% subordinated debentures due 2067 'BBB+'; --7.127% subordinated debentures due 2068 'BBB+'. Contact: Primary Analyst Jamie Tucker, CPA Associate Director +1-212-612-7856 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Dafina M. Dunmore, CFA Director +1-312-368-3136 Committee Chairperson James B. Auden, CFA Managing Director +1-312-368-3146 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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