DUFF & PHELPS: FEDERAL KEMPER LIFE ASSURANCE COMPANY CLAIMS PAYING ABILITY RATING REAFFIRMED AT 'AA-'
CHICAGO, July 20 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed Federal Kemper Life Assurance Company's (FKLA) claims paying ability rating at `AA-' (Double-A-Minus) and Kemper Investors Life Insurance Company's (KILICO) `A+' (Single-A-Plus) claims paying ability rating. Duff & Phelps has also reaffirmed the `A-' (Single-A-Minus) senior debt rating of Kemper Corporation. Kemper Corporation's senior debt rating reflects an adequate capitalization structure and adequate fixed charge coverage supported by the strong cash generating capacity of its "fee income" based asset management business, as well as the fact that Kemper's earnings over the last twelve months have been materially impacted by write downs and additional reserving for problem real estate related assets. The rating also incorporates Kemper's announced agreements to sell its Kemper Reinsurance Company, National Loss Control Services Corporation and Economy Fire & Casualty Company subsidiaries. In recent quarters, Kemper Corporation has been following through on its strategy to purchase, through holding company subsidiaries, problem real estate related assets from its life insurance company units. These actions, along with capital infusions are protecting the financial strength and marketing capabilities of its insurance company subsidiaries. FKLA's rating reflects the reduction of real estate related assets resulting from Kemper Corporation's resolve to purchase problem real estate assets, its historically high profitability and its ability to maintain a competitive cost advantage, and the maintenance of an appropriate degree of operating leverage. These positive elements are balanced against the risk of future development of problem real estate related investments. Reductions in below investment grade bond exposure have helped reduce FKLA's investment risk. FKLA's claims paying ability rating also reflects the implied liquidity support of Kemper Corporation's commitment (through resolutions adopted by its Board of Directors) to guarantee or refinance (subject to subordination to Kemper Corporation's senior indebtedness) any indebtedness of FKLA. Kemper Corporation has also committed to guarantee or refinance any indebtedness of KILICO under the same conditions applicable to FKLA. This implied liquidity support, a major reduction in below investment grade securities exposure, and the purchase of problem real estate and capital infusions by Kemper Corporation in recent quarters have helped counterbalance the risk of future development of problem loans and real estate for KILICO. These positive developments along with the maintenance of adequate profitability (before realized losses) provide support for KILICO's claims paying rating. -0- 7/20/93 /CONTACT: Kevin A. Ceurvorst, CFA, Duff & Phelps Credit Rating Company, 312-368-3144/ (KEM)
CO: Kemper Corporation ST: Illinois IN: FIN SU:
DH -- NY062 -- 6832 07/20/93 12:42 EDT
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|Date:||Jul 20, 1993|
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