AM Best Upgrades Credit Ratings of Kemper Corporation, Its Affiliates and Subsidiaries
Kemper Corporation has received significant credit rating upgrades from AM Best. The Financial Strength Rating (FSR) of its property/casualty subsidiaries has been upgraded to A (Excellent) from A-. Similarly, the Long-Term Issuer Credit Ratings (Long-Term ICR) have improved from a- to a. Kemper's life/health subsidiaries received the same upgrades. These changes reflect strong risk-adjusted capitalization and favorable operating performance despite dividend payments that have decreased policyholders' surplus. The overall outlook for these ratings has been revised to stable from positive.
- Upgraded Financial Strength Rating to A (Excellent) from A- for Kemper's property/casualty subsidiaries.
- Improved Long-Term Issuer Credit Ratings from a- to a for both property/casualty and life/health subsidiaries.
- Strong risk-adjusted capitalization maintained despite dividend payouts.
- Favorable return metrics and improved underwriting performance in recent years.
- Diversification of business profile has enhanced enterprise risk management.
- Decline in policyholders' surplus over the past five years due to significant shareholder dividend payments.
AM Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a” from “a-” of the property/casualty subsidiaries and affiliated insurance companies of Kemper Corporation (Kemper Corp.) [NYSE: KMPR], collectively referred to as Kemper Property & Casualty Group (Kemper P&C). AM Best also has upgraded the FSR to A (Excellent) from A- (Excellent) and the Long-Term ICRs to “a” from “a-” of Kemper Corp.’s life/health subsidiaries, collectively referred to as Kemper Life & Health Group (Kemper L&H) (Chicago, IL). Concurrently, AM Best has upgraded the Long-Term ICR and the Long-Term Issue Credit Ratings (Long-Term IR) to “bbb” from “bbb-” and upgraded the indicative Long-Term IRs of Kemper Corp., the ultimate parent, headquartered in Chicago, IL. AM Best also has upgraded the Long-Term ICR and Long-Term IR to “bbb” from bbb-” of Infinity Property and Casualty Corporation (Infinity) (headquartered in Birmingham, AL). The outlooks of these Credit Ratings (ratings) have been revised to stable from positive. See below for a detailed listing of all companies and ratings.
The Kemper P&C ratings reflect its balance sheet strength, which AM Best categorizes strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating upgrades reflect that Kemper P&C has consistently maintained risk-adjusted capitalization measuring at the strongest level in recent years, even while paying significant shareholder dividends. The group’s loss reserves have generally developed favorably over time. The group has demonstrated an ability to generate organic surplus growth through investment earnings and fee & service revenue, which was enhanced in recent years by profitable underwriting performance. The balance sheet strength is moderated by the payment of shareholder dividends, which have contributed to a decline in policyholders’ surplus over the past five years. The group’s invested assets produce above-average returns, but have a higher risk profile than peers, with above-average allocations to below-investment grade bonds and to limited partnerships and similar instruments. These risks are well-managed, and are supported by the current capital levels.
Kemper P&C’s operating performance has benefitted in recent years from improved underwriting performance. Its overall return metrics compare favorably with peers. The group has also taken actions to diversify its business profile and enhance the scope of its ERM.
The Kemper L&H ratings reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The rating upgrades reflects the group’s risk-adjusted capital position, which is at the strongest assessment level, its favorable capital to liability ratio, and its role as a consistent source of earnings to the enterprise as a result of its profitable operations. The rating action also takes into account the upgrade of the ratings of Kemper P&C.
The stable rating outlooks reflect AM Best’s expectation that the rated insurance operations’ balance sheet strength will remain at the strongest assessment level, underpinned by the strongest level of risk-adjusted capitalization. They further reflect the expectation that the operating insurance companies will maintain their consistent operating earnings, supported by their current business profile.
The FSR has been upgraded to A (Excellent) from A- (Excellent) and the Long-Term ICRs to “a” from “a-” with the outlooks revised to stable from positive for the members of the Kemper Property & Casualty Group:
- Trinity Universal Insurance Company
- Alpha Property & Casualty Insurance Company
- Capitol County Mutual Fire Insurance Company
- Charter Indemnity Company
- Financial Indemnity Company
- Infinity Insurance Company
- Infinity Assurance Insurance Company
- Infinity Auto Insurance Company
- Infinity Casualty Insurance Company
- Infinity Indemnity Insurance Company
- Infinity Preferred Insurance Company
- Infinity Safeguard Insurance Company
- Infinity Security Insurance Company
- Infinity Select Insurance Company
- Infinity Standard Insurance Company
- Infinity County Mutual Insurance Company
- Kemper Independence Insurance Company
- Merastar Insurance Company
- Mutual Savings Fire Insurance Company
- Kemper Financial Indemnity Company
- Old Reliable Casualty Company
- Response Insurance Company
- Response Worldwide Direct Auto Insurance Company
- Response Worldwide Insurance Company
- Union National Fire Insurance Company
- United Casualty Insurance Company of America
- Unitrin Advantage Insurance Company
- Unitrin Auto and Home Insurance Company
- Unitrin County Mutual Insurance Company
- Unitrin Direct Insurance Company
- Unitrin Direct Property & Casualty Company
- Unitrin Preferred Insurance Company
- Unitrin Safeguard Insurance Company
- Valley Property & Casualty Insurance Company
- Warner Insurance Company
The FSR has been upgraded to A (Excellent) from A- (Excellent) and the Long-Term ICRs to “a” from “a-” with the outlooks revised to stable from positive for the members of Kemper Life & Health Group:
- United Insurance Company of America
- Mutual Savings Life Insurance Company
- The Reliable Life Insurance Company
- Union National Life Insurance Company
- Reserve National Insurance Company
The following Long-Term IR has been upgraded, with the outlooks revised to stable from positive:
Kemper Corporation—
--to “bbb” from “bbb-” on
--to “bbb” from “bbb-” on
The following indicative Long-Term IRs have been upgraded, with the outlooks revised to stable from positive for the shelf registration:
Kemper Corporation—
--to “bbb” from “bbb-” on senior unsecured debt
--to “bbb-” from “bb+” on subordinated debt
--to “bb+” from “bb” on preferred stock
The following Long-Term IR has been upgraded, with the outlook revised to stable from positive:
Infinity Property and Casualty Corporation—
-- to “bbb” from “bbb-” on
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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