S&P rates Pinnacol notes BBB-

Standard & Poor’s said it assigned a BBB- rating to Pinnacol Assurance Co.’s $100 million surplus notes due in 2034.

The rating reflects the standard notching of two notches below the BBB+ financial strength rating on Pinnacol, the agency said.

The proceeds will be used to offset its future unfunded pension obligations, which it estimates to be at least $102 million on its 2013 financial disclosure of statutory statement, S&P said.

Since these surplus notes have a 20-year term, the agency said it does not provide any equity credit to them as per the agency’s hybrid criteria.

Pinnacol’s debt leverage is expected to be less than 20% and its interest coverage to be about 4x on average during 2014 to 2016, S&P said.

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