A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of South Carolina-based Kanawha Insurance Co. The rating outlook is stable and the action follows the recent announcement by Kanawha that it intends to be purchased by KMG America Corp. (Excelsior, Minn.).
KMG America filed to raise up to $253 million in an initial public offering of common stock. KMG America is a new holding company formed to acquire Kanawha. KMG America plans to use the proceeds from the offering to acquire the stock of Kanawha with the remaining proceeds to be used for general corporate purposes. A.M. Best expects that KMG America will maintain the appropriate capitalization at Kanawha, commensurate with its current rating level.
The rating reflects Kanawha’s established market niche and its maintenance of adequate capital and surplus. Partially offsetting these strengths are the company’s unfavorable statutory operating earnings and the geographic concentration of business.
Kanawha is a regional player in the worksite and senior health insurance markets. A large portion of its direct premium income continues to be concentrated in Florida, North Carolina and South Carolina.
In addition to its insurance operations, Kanawha HealthCare Solutions, a wholly owned subsidiary, operates as a third-party administrator.
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