A.M. Best Affirms and Assigns Ratings to Kanawha Insurance Company; Assigns Issuer Credit Rating To KMG America Corporation
07 Febrero 2006 - 2:48PM
Business Wire
A.M. Best Co. has affirmed the financial strength rating of A-
(Excellent) and assigned an issuer credit rating (ICR) of "a-" to
Kanawha Insurance Company (Kanawha) (Lancaster, SC). Additionally,
A.M. Best has assigned an ICR of "bbb-" to KMG America Corporation
(KMG) (NYSE: KMA) (Minnetonka, MN). All ratings have a stable
outlook. These rating actions reflect KMG's ownership of Kanawha
through an acquisition in December 2004. Prior to the acquisition,
KMG went through an initial public offering, and the proceeds were
used to help fund the acquisition of Kanawha. In addition, KMG
demonstrated its commitment to Kanawha with a substantial capital
contribution. The rating affirmations of Kanawha reflect the new
ownership and management team, the financial support of KMG and its
adequate level of overall risk-adjusted capitalization. Management
is utilizing Kanawha's administrative platform as the foundation to
build a national group benefits and worksite operation.
Furthermore, it is expanding its sales force and broadening its
product portfolio. The company has discontinued selling new
long-term care policies; however, it will maintain the existing
block of this business. Kanawha's unfavorable operating earnings
over the past few years increases the likelihood that its earnings
performance will be inhibited near term until Kanawha attains a
critical mass in the group and voluntary segments. A.M. Best
expects it will take the company some time before these segments
gain enough scale to generate appropriate levels of profitability.
While Kanawha has added many new sales representatives and is
entering new territories, it will likely take time for it to
achieve its sales goals. For Best's Ratings, an overview of the
rating process and rating methodologies, please visit
www.ambest.com/ratings. For current Best's Ratings, independent
data and analysis on more than 1,100 individual life/health
companies and A.M. Best groups, please visit www.ambest.com/lh.
A.M. Best Co., established in 1899, is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit A.M. Best's Web site at www.ambest.com.
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