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 Corp., collectively referred to as Kemper Property & Casualty Group.
Kemper P&C’s 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. In addition, the group’s loss reserves have generally developed favorably over time.
AM Best said the group has demonstrated an ability to generate organic surplus growth through investment earnings and fee and service revenue, which was enhanced in recent years by profitable underwriting performance.
However, the ratings agency said Kemper P&C’s 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. Nevertheless, 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, said AM Best, noting that the group’s 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 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, which are listed below:
- Trinity Universal Insurance Co.
- Alpha Property & Casualty Insurance Co.
- Capitol County Mutual Fire Insurance Co.
- Charter Indemnity Co.
- Financial Indemnity Co.
- Infinity Insurance Co.
- Infinity Assurance Insurance Co.
- Infinity Auto Insurance Co.
- Infinity Casualty Insurance Co.
- Infinity Indemnity Insurance Co.
- Infinity Preferred Insurance Co.
- Infinity Safeguard Insurance Co.
- Infinity Security Insurance Co.
- Infinity Select Insurance Co.
- Infinity Standard Insurance Co.
- Infinity County Mutual Insurance Co.
- Kemper Independence Insurance Co.
- Merastar Insurance Co.
- Mutual Savings Fire Insurance Co.
- Kemper Financial Indemnity Co.
- Old Reliable Casualty Co.
- Response Insurance Co.
- Response Worldwide Direct Auto Insurance Co.
- Response Worldwide Insurance Co.
- Union National Fire Insurance Co.
- United Casualty Insurance Company of America
- Unitrin Advantage Insurance Co.
- Unitrin Auto and Home Insurance Co.
- Unitrin County Mutual Insurance Co.
- Unitrin Direct Insurance Co.
- Unitrin Direct Property & Casualty Co.
- Unitrin Preferred Insurance Co.
- Unitrin Safeguard Insurance Co.
- Valley Property & Casualty Insurance Co.
- Warner Insurance Co.
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