A.M. Best Comments on Announcement of Acquisition of Summit Holdings Southeast, Inc. by American Financial Group, Inc.

A.M. Best Co. has commented that the issuer credit rating (ICR) of “bbb+” and all debt ratings of American Financial Group, Inc. (AFG) [NYSE/NASDAQ:AFG] are unchanged following its recent announcement that it has reached a definitive agreement to acquire Summit Holding Southeast, Inc. (Summit) and its related companies from Liberty Mutual Insurance (Liberty Mutual) (Boston, MA) in an all-cash transaction. In addition, A.M. Best has commented that the financial strength rating of A (Excellent) and ICRs of “a” of Summit’s insurance subsidiaries—Bridgefield Employers Insurance Company and Bridgefield Casualty Insurance Company also are unchanged.

Summit writes workers’ compensation insurance in the Southeastern United States. Post transaction close, the company will operate under the Summit brand as a member of AFG’s Great American Insurance Group. The transaction is expected to close in the first or second quarter of 2014, subject to regulatory approvals.

Under the terms of the transaction, AFG will pay Liberty Mutual an estimated $250 million at closing, subject to valuation adjustments. AFG’s total capital investment in Summit will be approximately $400 million, inclusive of a capital contribution at closing.

The transaction has no effect on AFG’s financial leverage measures as no external financing is utilized. AFG’s total debt-to-total capital (excluding accumulated other comprehensive income) and interest coverage ratios remain within A.M. Best’s guidelines for its current ratings. AFG has no material debt maturing until 2019, further benefitting its liquidity position.

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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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

A.M. Best Co.Gordon McLeanSenior Financial Analyst908-439-2200, ext. 5304gordon.mclean@ambest.comorJennifer MarshallAssistant Vice President908-439-2200, ext. 5327jennifer.marshall@ambest.comorRachelle MorrowSenior Manager, Public Relations908-439-2200, ext. 5378rachelle.morrow@ambest.comorJim PeavyAssistant Vice President, Public Relations908-439-2200, ext. 5644james.peavy@ambest.com