Fitch Ratings said it has downgraded the financial strength rating of Kemper Corp’s Trinity Universal Insurance Company to A- (Strong) from A.
Trinity Universal of Jacksonville, Florida is Kemper Corp.’s lead property/casualty operating subsidiary.
“The downgrades for Trinity and Kemper’s holding company ratings primarily reflect continued underwriting weakness through [the first half of 2023] and deterioration in P/C capitalization, compared with rating sensitivities,” Fitch said Aug 17.
Fitch cited loss trends in Kemper Auto (nonstandard personal and commercial auto) and Personal Insurance (preferred auto and homeowners) segments, higher catastrophe losses and adverse prior-year reserve development. The combined ratio for each segment was 109 and 115, respectively, for the first six months of the year.
Earlier this month, at the completion of an internal strategic review, Kemper announced it would non-renew or cancel preferred home and auto policies sold through its Kemper Personal Insurance brand to focus on its specialty P&C and life and health businesses.
Fitch said the run-off “could have a modest near-term impact on the company’s scale and performance volatility related to property exposure.” The rating agency said Kemper is ranked as the 12th-largest personal auto writer based on 2022 direct premiums written, with a strong market presence in nonstandard auto insurance.
“Kemper maintains competitive advantages in nonstandard auto business, but has faced profitability challenges in recent quarters,” Fitch said.
Fitch also downgraded the ratings for Kemper’s holding company, including the Issuer Default Rating (IDR) to ‘BBB’ from ‘BBB+’ and the senior debt ratings to ‘BBB-‘ from ‘BBB’.
“The company has addressed underwriting performance with targeted rate increases as well as non-rate actions over the last several quarters. Fitch expects approved rate increases will serve to limit further deterioration in underwriting results and help the company’s efforts to return to underwriting profitability over time,” Fitch said.
Topics Property Casualty
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