A.M. Best Co. reiterated the financial strength ratings (FSR)
of A- (Excellent) and issuer credit ratings (ICR) of "a-" of the
property and casualty subsidiaries and affiliated insurance
companies as well as life/health subsidiaries and Reserve
National Insurance Company of
Subsequently, the rating agency reiterated the ICR of "bbb-" and
senior debt ratings of "bbb-" on $250 million 6.0% unsecured
senior notes due 2015 and $360 million 6.0% unsecured senior
notes due 2017 of Kemper Corp. Additionally, the indicative
ratings of "bbb-" on senior unsecured debt and "bb" on preferred
stock expiring Nov 3, 2013 were reiterated.
Apart from the ratings of Reserve National Insurance, which
carries a negative outlook, all ratings carry a stable outlook.
Also, A.M. Best has withdrawn the FSR of A- (Excellent) and ICR
of "a-" of Response Indemnity Company of California.
The property and casualty subsidiaries and affiliated insurance
companies of Kemper are collectively known as P&C Group,
which is led by Trinity Universal Insurance Company. The rating
affirmation came on the back of sustained operating
profitability, diversified product portfolio, sufficient
risk-adjusted capitalization and liquidity.
The ratings also account for its initiatives to perk up
earnings, manage risks and lower exposure to cat losses. However,
underwriting losses incurred in the past couple of years along
with difficult underwriting and investment markets dwarf the
ASSURED GUARNTY (AGO): Free Stock Analysis
EASTERN INSURNC (EIHI): Free Stock Analysis
ENSTAR GROUP LT (ESGR): Free Stock Analysis
KEMPER CORP (KMPR): Free Stock Analysis
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The rating agency stated that the outlook or rating might be
subject to downgrade if capitalization erodes or operating
The life and health subsidiaries of Kemper are collectively known
as Kemper Life & Health Group (Kemper L&H). The rating
affirmation is based on its solid operational results, strong
position in the home service life insurance market and
established agency field force. In addition, persistently strong
operational results have augmented its capitalization. However,
the home service market has gradually matured and is offering
some potential for growth.
The rating agency might consider a rating upgrade if the company
delivers continued profitability along with growth in capital.
Ratings might be subject to downgrade if Kemper withdraws its
support for Kemper L&H and the P&C Group's financial
Ratings for Reserve National were affirmed based on its improving
net premium trend, strong results along with sufficient
risk-adjusted capitalization. The negative outlook accounts for
the effect of Patient Protection and Affordable Care Act.
The ratings might be downgraded if the company faces declining
earnings and surplus due to the Medical Loss Ratio (MLR)
requirement, operating performance deteriorates or risk-adjusted
capital erodes. The outlook might be upgraded if it reshuffles
its business mix to products that are exempted from the mandate
and maintain solid statutory earnings and risk-adjusted capital
Rating affirmations or upgrades from credit rating agencies play
an important part in retaining investor confidence on the stock
as well as maintaining credit worthiness in the market. Rating
downgrades, therefore, adversely affect the business, apart from
increasing the costs of future debt issuances. We believe that
strong ratings will help Kemper retain investor confidence and
write more businesses going forward, thereby boosting results.
Kemper carries a Zacks Rank #1 (Strong Buy). Multi-line insurers
Assured Guaranty Ltd
Enstar Group Ltd
Eastern Insurance Holdings, Inc
), among others, share the same Zacks Rank and appear