http://messages.finance.yahoo.com/S...27016&tid=321&mid=326&tof=20&rt=2&frt=2&off=1
Veg...the review will be completed in 2- 3 weeks.As far as Kma is concerned,the drubbing is overdone,but for different reasons than some of the gurus on this message board are saying.They have to do 2 things:1) raise more capital by selling their individual life block of business.It is now being shopped around.2) they have to show AM Best that their employer stop loss business is profitable.At this point that business has very high loss ratios.They raised their rates,so hopefully they get it back to profitability.In order to do this they have to sacrifice premiums(this also could be done).In the mean time they have not been downgraded...they will if they dont get their act in order,but I believe they will.I know the top guys,and they are pretty good.At one point I was looking to buy the whole company,but decided against it because of their exposure to the longterm care business,which they stopped writing in 2005,but they still have the reserve exposure(long tail business).This could be problematic if they have deficient reserves,so time will tell.Anyway good luck with this investment.
http://messages.finance.yahoo.com/S...27016&tid=321&mid=329&tof=20&rt=2&frt=2&off=1
veg...normally unless some adverse development occurs,such as significant reserve strengthening,they wait until the next rating cycle ,which is next year.One of my companies had an A with a negative outlook,and it took one year to get a stable rating.It is easy to get a dowgrade,but harder to get an upgrade.They should be able get their stop loss loss ratios ,but I am more concerned on their ultimate exposure on the long term care business,which is long tail.in other words you are a sitting duck if their reserve estimates are off.If your assumptions are just a little off,this could translate into big dollars because of the long tail.
http://messages.finance.yahoo.com/S...27016&tid=321&mid=340&tof=20&rt=2&frt=2&off=1
Veg...the reserve deficiency normally develops over time.The problem is that a lot of companies refuse to acknowledge that problem until the time they cant ignore it anymore.kma is aware of this problem,they dont write any new business since 2005.The stop loss business is a short tail business.They raised the rates,but the jury is still out whether they can bring this business back to profitability.My guess is that they can do this,but you have to wait at least 15 months to have a good indication of the profitability.The rating wont be changed unless there is some adverse development,such as significant increases in reserves,losses in other lines of business etc.etc.My gut tells me that this situation is not that bad.Best would have dowgraded them to B++ instead of giving them a negative outlook,Veg..just my opinion..there is a lot of value in this company.They own a good and large TPA(valuable),and they have good distribution channels,and a good guy at the top.Your down side risk at 4.70 is minimal.
