AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Kemper Corporation and Most of Its Subsidiaries and Affiliates

AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of 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 removed from under review with developing implications and affirmed the FSR of A- (Excellent) and the Long-Term ICR of a- of Kemper Corp.s life/health subsidiaries, collectively referred to as Kemper Life & Health Group (Kemper L&H). Concurrently, AM Best has removed from under review with developing implications and affirmed the Long-Term ICR of bbb-, as well as the Long-Term Issue Credit Ratings (Long-Term IR) of Kemper Corp., the ultimate holding company. The outlook assigned to these Credit Ratings (ratings) is stable. All companies are headquartered in Chicago, IL, unless otherwise specified.

AM Best also has removed from under review with negative implications and downgraded the FSR to A- (Excellent) from A (Excellent) and the Long-Term ICR to a- from a of Infinity Property and Casualty Corporations (Infinity P&C Corp.) subsidiaries, as well as the Long-Term ICR and the Long-Term IR to bbb- from bbb of Infinity P&C Corp. These rating actions follow the close of Kemper Corp.s acquisition of Infinity P&C Corp. and its subsidiaries (headquartered in Birmingham, AL) in July 2018, the successful execution of related intercompany reinsurance agreements, which became effective Dec. 1, 2018 and the conclusion of AM Bests overall assessment of the impact of these events. As a result, certain Infinity P&C Corp. subsidiaries became members of Kemper P&C. The outlook assigned to all of these Credit Ratings (ratings) is stable. 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 as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). Kemper P&Cs rating affirmations are attributable to its very strong level of risk-adjusted capitalization, evolving risk management practices and its strengthened position as one of the leading nonstandard auto writers in the United States, following its recent acquisition.

The Kemper L&H ratings reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

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Kemper L&Hs rating affirmations were driven by its very strong level of risk-adjusted capitalization, favorable capital to liability ratio, and a steady, meaningful and diverse source of earnings to Kemper Corp. Furthermore, Kemper L&Hs broad array of product including basic life insurance, final expense, limited accident and health benefits and other supplemental products also is driving the rating affirmations.

The FSR of A- (Excellent) and the Long-Term ICRs of a- have been removed from under review with developing implications and affirmed, with assigned outlooks of stable, for the following members of the Kemper Property & Casualty Group:

  • Trinity Universal Insurance Company (Dallas, TX)
  • Alpha Property & Casualty Insurance Company
  • Capitol County Mutual Fire Insurance Company
  • Charter Indemnity Company
  • Financial Indemnity 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 of A- (Excellent) and the Long-Term ICRs of a- have been removed from under review with developing implications and affirmed, with assigned outlooks of stable, for the following 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 FSR has been removed from under review with negative implications and downgraded to A- (Excellent) from A (Excellent) and the Long-Term ICRs downgraded to a- from a and stable outlooks assigned for the following new members of the Kemper Property & Casualty Group:

  • 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

The following Long-Term IRs have been removed from under review with developing implications and affirmed with a stable outlook assigned:

Kemper Corporation — bbb- on $450 million 4.35% senior unsecured notes, due 2025 — bb+ on $150 million 7.375% subordinated debentures, due 2054

The following indicative Long-Term IRs for securities available under the shelf registration have been removed from under review with developing implications and affirmed with a stable outlook assigned:

Kemper Corporation — bbb- on senior unsecured debt — bb+ on subordinated debt — bb on preferred stock

The following Long-Term IR has been removed from under review with negative implications and downgraded with a stable outlook assigned:

Infinity Property and Casualty Corporation — to bbb- from bbb on $275 million 5% senior unsecured notes, due September 2022

This press release relates to Credit Ratings that have been published on AM Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Michael T. Venezia
Senior Financial Analyst – P/C
+1
908 439 2200, ext. 5034

[email protected]

Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159

[email protected]

Bruno Caron, FSA, MAAA
Senior Financial Analyst – L/H
+1
908 439 2200, ext. 5144

[email protected]

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644

[email protected]