Moody’s rates BenefitMall, facilities B2

Moody's Investors Service said it assigned BMC Merger Sub, Inc. (BenefitMall) a corporate family rating of B2, probability of default rating of B2-PD and a B2 rating to both the senior secured first-lien term loan and the senior secured first-lien revolver.

The outlook is stable.

Debt proceeds, along with new equity provided by Carlyle Group LP and affiliated funds and rollover equity of BenefitMall management, will be used to fund Carlyle's acquisition of BenefitMall from Austin Ventures.

Moody’s said the B2 corporate family rating reflects BenefitMall's starting leverage, which the agency estimates at about 5.1 times debt to EBITDA (latest 12 months ended Sept. 30, 2017, pro forma for new debt, Moody's adjusted), which is high given the slow-growth, mature markets (health benefits brokerage, payroll processing) in which BenefitMall competes, BenefitMall's modest market share in the payroll market relative to ADP and Paychex, Inc., among others, and the limited defensible market position in the highly-fragmented General Agency insurance market.

Customer concentration in commission revenues, with the top five insurance carriers accounting for about one third of total revenues, also weighs on the rating, the agency added.

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