Moody's ups Anthem senior to Baa1

Moody's Investors Service upgraded the ratings of Anthem Inc., including senior debt to Baa1 from Baa2, and its units' financial strength ratings, based on strong fundamental performance in recent years.

Also, Moody's said the outlook is now stable following the announced $16.4 billion merger with WellPoint Health Networks Inc.

In explaining the upgrade, Moody's cited Anthem's diversified health benefits operations and strong market share in several states, disciplined financial management, sound strategic focus and proven prowess in acquisitions.

Moody's said the merger with WellPoint will bring together two premier health benefits companies and, although financial leverage is increasing, management is being prudent in its financing of this acquisition by utilizing a significant portion of equity.

Offsetting these strengths are significantly higher debt levels, substantial amounts of goodwill and potential integration risks.

S&P affirms Jones Apparel

Standard & Poor's confirmed the ratings of Jones Apparel Group Inc. and subsidiary Jones Apparel Group USA Inc. including their senior unsecured debt at BBB, reflecting comfort with progress in replacing lost 2004 revenues and operating profit from the Lauren license. The outlook is stable.

The affirmation also reflects that Jones has been able to maintain fairly stable operating results despite very difficult industry conditions, especially in the better department store channel. Furthermore, S&P expects Jones will continue to maintain a moderate financial profile and solid credit protection measures.

Credit protection measures are in line with the rating category. For the trailing 12 months ended Oct. 4, lease-adjusted total debt to EBITDA was 2.3x and adjusted EBITDA coverage of interest was over 8.0x.

Liquidity is sufficient with $194.2 million in cash and about $1.1 billion available under its $1.4 billion of credit facilities at Oct. 4.

S&P puts Horace Mann on watch

Standard & Poor's put Horace Mann Educators Corp. on CreditWatch negative including its senior unsecured debt at BBB+.

S&P said the action follows Horace Mann's announcement of lower-than-expected net income. The earnings warning is the result of adverse prior years' development primarily related to voluntary auto liability claims from the 2001 and 2002 accident years and reserve strengthening, including the current accident year.

With these reserves charges and spread compression at the life company, Horace Mann will be challenged to meet S&P's earnings expectations for full-year 2003. Property/casualty operating results for 2003 will likely fall outside the expected 100% combined ratio for the year.

On the other hand, S&P said it believes Horace Mann's capital adequacy for the entire group will remain above the level for the rating despite the reserves strengthening.

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