Moody's rates Pacific LifeCorp notes Baa1

Moody's Investors Service said it assigned a Baa1 rating to Pacific LifeCorp's $500 million 30-year 5.125% senior fixed-rate unsecured debt issuance.

The proceeds are expected to be used to finance Pacific Life Insurance Co.'s cash tender of $323 million of its 9.25% surplus notes due in 2039, with a tender premium of about $155 million.

Remaining proceeds from Pacific Life's 144A senior debt issuance will be used for general corporate purposes.

Refinancing the higher-cost surplus notes with lower-cost senior debt should improve coverage metrics on a go-forward basis, Moody's said.

Following the issuance, adjusted financial leverage is expected to remain in the low 20% range, consistent with the current rating level, the agency said.

Pacific Life's excellent business profile includes established market positions in variable and universal life, Moody's said, and a more modest position in annuities.

The company's strengths are somewhat offset by risks arising from the variable annuity business, which is sensitive to equity market fluctuations and exposure to credit losses in the investment, the agency said.

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