A.M. Best Assigns Debt Rating to the Forthcoming Senior Notes of American Financial Group, Inc.

A.M. Best Co. has assigned a debt rating of “bbb+” to the forthcoming $200 million, 6.375% senior notes due June 2042 of American Financial Group, Inc. (Cincinnati, OH) [NYSE: AFG]. The ratings have been assigned a positive outlook.

The positive outlook is consistent with the other existing ratings of AFG and most of its core operating insurance subsidiaries. (Please see A.M. Best’s press release dated March 29, 2012.)

The net proceeds from the offering, together with additional cash on hand, will be used to redeem $198.75 million principal of senior debt issued by AFG’s subsidiary, AAG Holding Company, Inc. (AAG), and guaranteed by AFG. AFG has granted the underwriters a 30-day option to purchase up to an additional $30 million aggregate principal amount of senior notes. If the underwriters choose to exercise their option, any funds remaining after the redemption of the AAG debt will be used either to redeem in part AFG’s 7.125% senior notes due January 2034 or retained for general working capital purposes.

Due to the 30-day call feature of the AAG debt, both that debt and the new AFG debt will be outstanding for a short period of time. AFG’s financial leverage and coverage ratios remain comfortably within the range that supports its current ratings, even during the brief interim period.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include “Insurance Holding Company and Debt Ratings.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

American Financial (NYSE:AFG)
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