A.M. Best Assigns Debt Rating to Delphi Financial Group, Inc.’s New Senior Notes

A.M. Best Co. has assigned a debt rating of “bbb” to the newly issued $250 million 7.875% senior unsecured notes due January 2020 of Delphi Financial Group, Inc. (Delphi Financial) (Wilmington, DE) [NYSE: DFG]. The assigned outlook is negative. Delphi Financial and its subsidiaries’ existing financial strength, issuer credit and debt ratings are unchanged.

The proceeds are to be used to pay off $222 million of debt at the existing bank credit facility and for general corporate purposes. At September 30, 2009, Delphi Financial’s debt-to-capital ratio was reported at 19.2%, and the company’s financial leverage has remained lower than or comparable to its industry peers. Leverage is expected to increase slightly to approximately 20% with the new debt.

A.M. Best remains concerned with Delphi Financial’s large investment exposure to structured securities along with the sizeable amount of realized capital losses incurred in 2008 and 2009. Most of the organization’s subpar investment performance was at its flagship life insurance subsidiary, Reliance Standard Life Insurance Company.

Delphi Financial’s ratings reflect its established presence within the small to mid-sized employee benefits and aggregate and specific excess workers’ compensation marketplaces along with the organization’s continued favorable operating profitability.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

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