Moody's downgrades Kemper Insurance, Lumbermens Mutual Casualty Co.

Moody's Investors Service downgraded members of the Kemper Insurance Co. inter-company pool to Caa3 from B3, and downgraded the ratings of surplus notes issued by Lumbermens Mutual Casualty Co., the lead company of Kemper's inter-company pool, to C from Ca.

All ratings were withdrawn by the rating agency, as the company is no longer writing new business and continues to run-off existing businesses.

Moody's said the downgrade follows the company's announcement that it expects reported statutory surplus in its audited 2002 financial statements to be lower than previously reported in the its unaudited 2002 statements filed with state regulators.

The negative adjustments to surplus are related to asset write-downs and reductions in deferred revenue accruals which stem from the fact that the company is in run-off, Moody's said.

Moody's noted that the Caa3 insurance financial strength ratings reflect an assessment of potential loss severity to policy holders considering the further deterioration in statutory surplus. The surplus note rating reflects Moody's expectation that the severity of loss to note holders is likely to be substantial. Moody's noted that even modest deterioration in the company's loss reserves, reinsurance recoverables, and/or investment portfolio would have a leveraged effect on Lumbermens' surplus, and therefore negatively impact funds available to repay creditors.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.