A.M. Best Places Credit Ratings of Kemper Corporation, Its Affiliates and Subsidiaries Under Review With Developing Implications

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has placed under review with developing implications the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a-” for the property/casualty subsidiaries and affiliated insurance companies of Kemper Corporation (Kemper Corp.) [NYSE: KMPR], collectively referred to as Kemper Property & Casualty Group. A.M. Best also has placed under review with developing implications the FSR of A- (Excellent) and the Long-Term ICRs of “a-” for Kemper Corp.’s life/health subsidiaries, collectively referred to as Kemper Life & Health Group (Kemper L&H). Concurrently, A.M. Best has placed under review with developing implications the Long-Term ICR of “bbb-” and the Long-Term Issue Credit Ratings (Long-Term IR) of Kemper Corp., the ultimate parent. All companies are headquartered in Chicago, IL, unless otherwise specified. (See below for a detailed listing of the companies and ratings.)

This Credit Rating (rating) action follows the Feb. 13, 2018, announcement of an agreement by Kemper Corp. to purchase Infinity Property & Casualty Corporation (Infinity) [NASDAQ: IPCC]. The transaction was valued at approximately $1.4 billion, or $129.00 per Infinity share; the exchange ratio for stock consideration to be issued in the merger is fixed and was determined based on Kemper’s 20-trading day volume weighted average price as of Feb. 12, 2018, of $64.40. This represents an approximately 33% premium to Infinity’s closing price of $97.05 as of Feb. 12, 2018. Based on Kemper’s Feb. 12, 2018, closing stock price of $57.75, the implied total consideration is approximately $1.3 billion, or $121.01 per Infinity share, an approximately 25% premium to Infinity’s closing price of $97.05 as of Feb. 12, 2018. This deal is expected to close in the third quarter of 2018 and is expected to be financed as a cash and stock transaction.

The developing implications status reflects the need for A.M. Best to evaluate Kemper’s plans to integrate Infinity into existing insurance operations, as well as to ensure that risk-adjusted capitalization is maintained at levels in line with its current ratings. Additionally, A.M. Best needs to gain greater insight into the overall impact on the company’s business profile, business writings and operating performance. The ratings will remain under review pending the completion of the transaction and the conclusion of A.M. Best’s discussions with management.

The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have been placed under review with developing implications 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 placed under review with developing implications 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 following Long-Term IR has been placed under review with developing implications:

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 placed under review with developing implications:

Kemper Corporation—

-- “bbb-” on senior unsecured debt

-- “bb+” on subordinated debt

-- “bb” on preferred stock

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

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Michael T. Venezia, +1-908-439-2200, ext. 5034

Senior Financial Analyst – P/C

[email protected]

or

Bruno Caron, FSA, MAAA, +1-908-439-2200, ext. 5144

Financial Analyst – L/H

[email protected]

or

Christopher Sharkey, +1-908-439-2200, ext. 5159

Manager, Public Relations

[email protected]

or

Jim Peavy, +1-908-439-2200, ext. 5644

Director, Public Relations

[email protected]