S&P: Kanawha still on positive watch

Standard & Poor's said its BBB counterparty credit and financial strength ratings on Kanawha Insurance Co. are remaining on CreditWatch with positive implications following the announcement by Kanawha's parent company, KMG America Corp., that it had a $224,000 pretax loss for the third quarter of 2007.

The agency said that the loss was primarily related to an increase in incurred claims in Kanawha's long-term care insurance business.

S&P said it believes that this line of business is inherently volatile and has a greater impact on Kanawha's overall profitability because of the company's diminished earnings profile in 2007 compared with prior years.

Nevertheless, S&P said it also believes that the third-quarter long-term care insurance experience is not recurring in nature and not indicative of a deteriorating block of business.

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