Kemper's Best Ratings Downgraded
NU Online News Service, June 11, 2:50 p.m. EDT?A.M. Best said it has downgraded its financial strength ratings for participants in the beleaguered Kemper Insurance Companies' intercompany pool, eight reinsured affiliates and one domestic affiliate to "D" (Poor) from "C-Double-Plus" (Marginal).
The Oldwick, N.J.-based ratings agency said the ratings downgrade comes after the announcement that Lumbermens Mutual Casualty Company, the lead company in the intercompany pool, is expecting its statutory surplus from last year to be substantially lower than currently stated when the year-end 2002 independent financial audit is completed.
This reduction, Best added, can be attributed to Lumbermens' decision to enter into a voluntary run-off and terminate its surplus notes tender offer this year.
Additionally, Best has cut the financial strength ratings to "C-Double-Plus" (Marginal) from "B" (Fair) for the Eagle Insurance Group, a subsidiary of Lumbermens Mutual Casualty Company, because of Lumbermens' weakened capitalization.
The rating of Eagle Insurance remains under review with negative implications, Best added, pending a successful conclusion of its capital enhancement efforts, including the sale of the Eagle Group and collateralization of recoverables from the Lumbermens.
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