S&P Places Kemper Investors Life Rtgs on WatchNeg.Business Editors NEW YORK--(BUSINESS WIRE)--May 30, 2003 Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. said today that it placed its 'A+' counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and financial strength ratings on Kemper Investors Life Insurance Co. (KILICO KILICO Kemper Investors Life Insurance Company ) on CreditWatch with negative implications following the announcement by its parent, Zurich Financial Services Zurich Financial Services Group is a major financial services group based in Zurich, Switzerland. Global operations North America The US consumer market is served primarily by Farmers Insurance Group the third largest personal lines property & casualty insurance (ZFS (1) (Zettabyte File System) A distributed file system from Sun that was added to OpenSolaris in 2005 and Solaris 10 in 2006. With support for 128 bits, compared to 64 for NTFS and other contemporary file systems, storage capacity is unlimited for all practical ), that it has entered into an agreement with Bank One Corp. to sell Federal Kemper Life Assurance Co. (FKLA), Zurich Life Insurance Co. of America (ZLICA), and other related subsidiaries to Bank One. Bank One will assume -- through reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. -- most lines of business currently underwritten by KILICO. ZFS will retain the KILICO legal entity and certain variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. contracts. Standard & Poor's also said that it affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its 'A+' counterparty credit and financial strength ratings on FKLA and ZLICA. The outlook on these two companies remains negative. "The ratings on KILICO were placed on CreditWatch negative because of the belief that the ratings need to be reassessed in light of KILICO's developing profile," said Standard & Poor's credit analyst Kevin Ahern. "Standard & Poor's will continue to hold discussions with ZFS to assess KILICO's strategic importance within its operation relative to ZFS's remaining U.S. life insurance operations. Standard & Poor's will also assess KILICO's role as the primary vehicle for ZFS's U.S. annuity business through Farmers New World Life Insurance Co." KILICO will be strongly capitalized and will diversify its operational profile through reinsurance of a significant portion of Farmers New World Life's fixed and variable annuity business. However, the ratings need to be reviewed in the context of KILICO's concentration in equity-based liabilities, which exposes KILICO to some revenue and earnings volatility. Bank One Corp. (A/Stable/A-1), a bank holding company, is a leading distributor of annuity products. In conjunction with its existing insurance operations, the proposed acquisition is expected to further strengthen Bank One's platform for potential growth in the life insurance sector. The ratings on FKLA and ZLICA reflect the view that this transaction is likely to benefit these operations' existing strengths, given the expected capital support and potential strategic fit within the Bank One operation. The negative outlook on these companies is based on the existing pressure on operating performance. Standard & Poor's expects continued pressure on FKLA and ZLICA's earnings given the volatile investment markets. These pressures are affecting a large percentage of U.S. life insurers. Despite this pressure, their quality of earnings is relatively stable given that a good portion of total earnings is derived from life insurance. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar A set of buttons or graphic images typically in a row or column used as a central point that link you to major topic sections on a Web site. If the navigation bar is a single graphic image with multiple selections, it is known as an imagemap. See imagemap. , select Credit Ratings Actions. |
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