S&P Lowers United Fire

Standard & Poor’s lowered to “A” its counterparty credit and financial strength ratings on the members of United Fire Group and its affiliate United Life Insurance Co. and changed the companies’ CreditWatch status to developing. S&P also assigned its “BBB+”rating to Iowa-based United Fire & Casualty Co.’s convertible preferred stock issue and placed it on CreditWatch with developing implications.

The CreditWatch status for these companies changed to developing from negative because proceeds from United Fire & Casualty Co.’s preferred stock issue provides much needed capital to support its growth plans while working to improve earnings, which have been weak and volatile in recent years because of a series of catastrophe losses. An improved capital adequacy resulting from the convertible preferred stock offering the group should be able to take advantage of the hardening market, according to an S&P credit analyst. The ratings remain on CreditWatch due to uncertainties with United Fire’s proposed strategies for the use of the proceeds and its long-term plan for profitable revenue growth, among other things.