AM Best Comments on Credit Ratings of Kemper Corporation Following Announcement of Acquisition of American Access Casualty Company
AM Best has affirmed the Long-Term Issuer Credit Rating of 'bbb-' for Kemper Corporation (KMPR) and a Financial Strength Rating of A- for its subsidiaries. The ratings are unchanged despite Kemper's announcement of its acquisition of American Access Casualty Company for $370 million in cash. This acquisition aims to grow Kemper's specialty auto net premiums by over 10% and enhance its presence in Hispanic communities. The outlook for Kemper's credit ratings remains positive, with financial metrics expected to stay within AM Best's guidelines.
- Acquisition of American Access for $370 million to enhance specialty auto net premiums by over 10%.
- Expansion into niche markets and increased presence in Hispanic communities.
- Positive outlook for credit ratings maintained by AM Best.
- Increase in tangible leverage expected post-acquisition.
- Management forecasted earnings to neutralize leverage increase may not be guaranteed.
OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) rating of “bbb-” of Kemper Corporation (Kemper) (Delaware) [NYSE:KMPR], and the Financial Strength Rating (FSR) of A- (Excellent) and Long-Term ICRs of “a-” of its property/casualty operating subsidiaries, referred to as Kemper Property & Casualty Group, are unchanged by the announcement that Kemper plans to acquire American Access Casualty Company (American Access) (Downers Grove, IL) for
The acquisition is in line with Kemper’s strategy of seeking growth in niche markets. Based on the most recent 12-month results, the acquisition will increase Kemper’s specialty auto net premiums written by over
Following the close of the transaction, expected in the first quarter of 2021, Kemper’s financial leverage and coverage metrics are expected to remain comfortably within AM Best’s guidelines for the ratings. The transaction will drive an increase in tangible leverage, but management anticipates earnings over the course of the first year after the acquisition to neutralize this effect. As a result, AM Best does not expect that the transaction will have any adverse rating impact, but will continue to discuss its progress with management and assess its effects on Kemper’s operations.
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