Moody’s could lower Infinity

Moody's Investors Service said it placed the Baa2 senior debt rating of Infinity Property and Casualty Corp. and the A2 insurance financial strength ratings of its principal operating subsidiaries on review for downgrade following the company's announcement that it entered into an agreement to be acquired by Kemper Corp. (Baa3 senior, stable) for $1.3 billion in cash and stock.

The transaction is expected to close in the third quarter, and is subject to shareholder approvals by both companies and regulatory approvals.

“The review for downgrade of Infinity's ratings is prompted by Kemper's lower credit profile, an expectation that Kemper would likely increase Infinity's investment risk, and a potential reduction in cash/capital to help fund the transaction,” Moody’s said in a news release.

“However, Infinity would be part of a larger, more diversified organization with a combined leading position in nonstandard auto insurance.

“The review will focus on Infinity's prospective profitability, operational flexibility, and capital adequacy.”

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