A.M. Best has upgraded the issuer credit rating (ICR) to
“a-” from “bbb+” and the debt ratings of American Financial
Group, Inc. (AFG) [NYSE/NASDAQ: AFG]. Concurrently, A.M. Best
has upgraded the financial strength rating (FSR) to A+ (Superior)
from A (Excellent) and the ICRs to “aa-” from “a+” of Great
American Insurance Company and its pooling affiliates
(collectively referred to as Great American Insurance Companies or
Great American). The outlook for the above ratings has been revised
to stable from positive.
In addition, A.M. Best has affirmed the FSR of A+ (Superior) and
ICRs of “aa” of the property/casualty members of American Empire
Surplus Lines Pool (American Empire). A.M. Best also has
affirmed the FSR of A (Excellent) and ICRs of “a” of the members of
the Republic Indemnity Insurance Pool (Republic Indemnity)
(headquartered in Encino, CA). The outlook for the ratings of
American Empire and Republic Indemnity is stable.
Concurrently, A.M. Best has affirmed the FSR of A+ (Superior)
and the ICRs of “aa-” of the property/casualty members of the
Mid-Continent Group (Mid-Continent) (headquartered in Tulsa,
OK). The outlook for these ratings is stable. All companies are
subsidiaries of AFG and are headquartered in Cincinnati, OH, unless
otherwise specified. (Please see link below for a detailed listing
of the companies and ratings.)
The ratings of Great American reflect its excellent
risk-adjusted capitalization, strong operating profitability
sustained over the long term and diversified business profile,
which serves to protect its earnings stream. Great American’s
strong operating performance reflects the profitable underwriting
results derived through management’s disciplined operating strategy
and specialty market knowledge, as well as the group’s multiple
distribution channels, diversified product offerings, excellent
geographic spread of risk, as well as access to data through its
sophisticated technology platform. Great American’s strong
underwriting performance also reflects the diversification of its
premium writings and its modest exposure to natural catastrophes.
The group also benefits from the financial flexibility provided by
AFG, which maintains financial leverage that is in line with its
current ratings, as well as additional liquidity sources given its
access to capital markets and lines of credit. A.M. Best expects
that earnings and cash flows from AFG’s operating subsidiaries will
allow it to support Great American’s risk-adjusted capitalization,
should the need arise.
These positive rating factors are somewhat offset by the
significant stockholder dividends paid to AFG over the recent
five-year period, which has constrained organic surplus growth, as
well as elevated common stock leverage and adverse loss development
in certain lines of business. While Great American has reported
favorable loss reserve development in recent calendar years, areas
of adverse reserve development persist, particularly relating to
the run-off of its asbestos and environmental (A&E) claims.
Despite these offsetting factors, the outlook for the ratings
acknowledges the group’s excellent risk-adjusted capitalization,
solid underwriting performance throughout the underwriting cycle,
experienced management team and balanced portfolio of specialty
risks that are enhanced by its geographic diversification.
Mid-Continent’s ratings reflect its solid risk-adjusted
capitalization, very strong operating performance sustained over
the long term and successful position within its targeted markets.
The group’s favorable underwriting and operating results reflect
management’s proven product knowledge, accurate pricing and
commitment to maintaining conservative reserving standards. The
group also benefits from the financial flexibility provided by
AFG.
These positive rating factors are partially offset by the
significant stockholder dividends paid to AFG, which has reduced
policyholder surplus during the recent five-year period, and the
group’s relatively limited geographic spread of business as the
majority of business is derived from Oklahoma, Texas and
Florida.
American Empire’s ratings acknowledge its superior risk-adjusted
capitalization, very strong operating performance over the long
term (within the excess and surplus lines marketplace) and the
successful track record of the executive team in managing
operations through all phases of the market cycle. American
Empire’s strong operating performance reflects its highly
profitable underwriting results, low-cost operating structure and
solid investment yield despite a reduction in the invested asset
base, which has reduced investment income. The group’s underwriting
results are reflective of management’s disciplined underwriting
approach, accurate pricing, market expertise and strong product
knowledge. The ratings also recognize the benefits of the financial
flexibility provided by AFG.
These positive rating factors are partially offset by the
sensitivity of the group’s premium volume to the property/casualty
market cycle, the impact of reduced premium on operating results
and the significant level of stockholder dividends paid during the
recent five-year period.
The ratings of Republic Indemnity are based on its historically
strong operating performance, solid capitalization achieved through
profitable operations and the executive management team’s
successful track record in managing operations through all phases
of the market cycle, primarily within California. The ratings also
recognize the implicit and explicit support afforded by AFG, which
has infused capital as needed to maintain Republic Indemnity’s
risk-adjusted capitalization.
These positive rating factors are somewhat offset by the
downturn in underwriting performance beginning in 2009 through
2012, relative to the group’s historical profitability levels given
the impact of the macroeconomic environment, the cumulative impact
of stockholder dividends paid to AFG and the group’s concentrated
business risk, operating as a monoline workers’ compensation
insurer with a high concentration of premium volume in
California.
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 maintains sound
liquidity with parent company cash of approximately $525 million at
December 31, 2013, as well as access to a $500 million revolving
credit facility. AFG has no material debt maturing until 2019,
further benefitting its liquidity position. AFG relies on
stockholder dividends from its subsidiaries to fund interest
expenses, repurchase company stock, redeem debt, re-allocate
capital to support its operating entities and for other corporate
purposes. Nonetheless, management remains committed to maintaining
capital at the rated entities at levels commensurate with their
ratings.
Due to recent rating actions taken by A.M. Best on the
organization in recent years, additional positive rating actions
are unlikely in the near term.
Key factors that could trigger negative rating actions include a
material deterioration of underwriting and operating results,
particularly if the resulting performance is materially below
similarly rated peers, a significant weakening in risk-adjusted
capitalization, or an increase in the financial leverage or
reduction in the interest coverage at AFG to a level that is out of
line with its current ratings.
For a complete listing of American Financial Group, Inc. and its
subsidiaries’ FSRs, ICRs and debt ratings, please visit
www.ambest.com/press/022110americanfinancial.pdf.
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.
Copyright © 2014 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
A.M. BestGordon McLean, 908-439-2200, ext.
5304Senior Financial
Analystgordon.mclean@ambest.comorJennifer Marshall, CPCU,
908-439-2200, ext. 5327Assistant Vice
Presidentjennifer.marshall@ambest.comorRachelle Morrow,
908-439-2200, ext. 5378Senior Manager, Public
Relationsrachelle.morrow@ambest.comorJim Peavy,
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
American Financial (NYSE:AFG)
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부터 6월(6) 2024 으로 7월(7) 2024
American Financial (NYSE:AFG)
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부터 7월(7) 2023 으로 7월(7) 2024