CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - DECEMBER 22, 2004 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of Kanawha Insurance Company (Kanawha) (Lancaster, SC). The rating outlook remains stable.
This rating action follows the announcement that KMG America (KMG) (Excelsior, MN) has finalized its acquisition of Kanawha for approximately $138.9 million. This final purchase price was subject to adjustment based on Kanawha's net worth as of the last day of the quarter immediately ending prior to the closing date. The transaction is structured as follows: $123.9 million to be paid in cash at closing and $15 million to be paid in the form of a five year subordinated promissory note, bearing interest at 5% per annum, compounded annually. The payment of the aggregate principal and interest of approximately $19.1 million is due in full at maturity.
KMG America Corporation is a newly formed holding company. KMG's initial public offering raised $191.3 million. Proceeds from the offering were used to fund the acquisition of Kanawha and for general purposes.
Kanawha is a provider of voluntary life and health insurance products in the southeastern United States. A.M. Best believes that KMG will give Kanawha the opportunity to grow its worksite insurance marketing and distribution business. Furthermore, it will allow Kanawha to differentiate itself by offering a broad mix of voluntary and group life and health insurance products, which when combined with its third-party administration services, are designed to provide an attractive mix of products and services to employers and their employees. A.M. Best also expects Kanawha to maintain a Best's Capital Adequacy Ratio in the "Excellent" range, and Kanawha will serve as KMG's primary platform for operations and future growth.
For current Best's Ratings, independent data and analysis on more than 1,050 health companies and more than 130 HMO industry composites please visit Best's Health Center.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.