AM Best has affirmed the Financial Strength Rating (FSR)
of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term
ICR) of “aa-” (Superior) of Great American Insurance Company and
its pooling affiliates, collectively referred to as Great American
Insurance Companies (Great American). Concurrently, AM Best has
affirmed the Long-Term ICR of “a-” (Excellent) and the Long-Term
Issue Credit Ratings (Long-Term IRs) of American Financial Group,
Inc. (AFG) (Cincinnati, OH) [NYSE: AFG]. The outlook of these
Credit Ratings (ratings) is stable.
At the same time, AM Best has affirmed the FSR of A+ (Superior)
and the Long-Term ICRs of “aa-” (Superior) of the property/casualty
(P/C) members of the Great American Contemporary Pool
(collectively, Great American Contemporary and formerly known as
Republic and Summit Insurance Pool). The outlook of these ratings
is stable. Republic is headquartered in Calabasas, CA, and Summit
is domiciled in Lakeland, FL.
AM Best also has affirmed the FSR of A+ (Superior) and the
Long-Term ICRs of “aa-” (Superior) of the P/C members of the
Mid-Continent Group (Mid-Continent) (headquartered in Tulsa, OK).
Additionally, AM Best has affirmed the FSR of A+ (Superior) and the
Long-Term ICRs of “aa-” (Superior) of National Interstate Insurance
Company (headquartered in Richfield, OH) and its affiliates
(collectively referred to as National Interstate). The outlook of
the aforementioned ratings is stable.
All companies are subsidiaries of AFG and headquartered in
Cincinnati, OH, unless otherwise specified. (Please see link below
for a detailed listing of the P/C companies and ratings.)
The ratings of Great American reflect its balance sheet
strength, which AM Best assesses as strongest, as well as its
strong operating performance, favorable business profile and
appropriate enterprise risk management (ERM).
Great American’s ratings are aided by its risk-adjusted capital,
which in recent years has been consistently assessed in the
strongest category, as measured by Best’s Capital Adequacy Ratio
(BCAR), with little volatility. Great American also has consistent
operating performance on par with peers similarly assessed at the
strong level, which is reflective of its profitable underwriting
results that are supported by a diversified product portfolio and
business profile through its multiple distribution platforms. An
offsetting factor is a high dividend payout ratio to the parent
company due to the capital management strategies of the parent
company.
The ratings of Great American Contemporary reflect its balance
sheet strength, which AM Best assesses as very strong, as well as
its strong operating performance, neutral business profile and
appropriate ERM. The ratings of Great American Contemporary also
reflect rating lift from the lead rating unit, Great American. The
combined pool member entities maintain risk-adjusted capital at the
very strong level, as measured by BCAR, which is supported by
consistently strong operating performance that has remained
profitable over the past five years and outperformed composite
peers. Despite its narrow focus in the workers’ compensation
segment, the group is among the market leaders in its focused
geographic areas, in particular, ranking as the largest provider in
Florida through an extensive network of independent agents and
advisers. Despite its leadership position, it remains concentrated
in Florida and California, which exposes the group to regulatory
and legislative risks. The group members also maintain higher
underwriting leverage than peers with a high dividend payout to its
parent, tempering surplus growth.
The ratings of Mid-Continent reflect its balance sheet strength,
which AM Best assesses as very strong, as well as its adequate
operating performance, neutral business profile and appropriate
ERM. The ratings also reflect ratings lift from the lead rating
unit, Great American, recognizing the historical support provided
by ultimate parent, AFG. Mid-Continent’s ratings are supported by
its strongest risk-adjusted capital position, as measured by BCAR,
and consistent ability to maintain this level of capital support
through positive organic operating earnings. These factors are
offset by its more concentrated earning segments and limited
geographic profile, which exposes the group to increased
regulatory, legislative and competitive risks.
The ratings of National Interstate reflect its balance sheet
strength, which AM Best assesses as very strong, as well as its
strong operating performance, neutral business profile and
appropriate ERM. The ratings also reflect lift from the lead rating
unit, Great American. National Interstate’s ratings are supported
by risk-adjusted capitalization assessed at the strongest level, as
measured by BCAR, a prudent investment portfolio and high quality
of reinsurance partners. The group has shown significant expertise
in its niche-focused market of captive risk transfer products for
the transportation market. Despite this more limited focus, the
group has demonstrated consistent favorable operating results on
par with peers with a similar balance sheet strength assessment
level of strong through strong underwriting results. Offsetting
factors include a high dividend payout to its parent, and a more
concentrated market focus.
Each of the groups discussed above also benefits from the
financial flexibility provided by AFG, which has additional
liquidity sources given its access to capital markets and lines of
credit. AM Best expects that earnings and cash flows from AFG’s
operating subsidiaries will allow it to support risk-adjusted
capitalization at the operating level, should the need arise. At
the same time, surplus growth at each group has been limited over
the past five years by the payment of significant stockholder
dividends to AFG. These dividends vary based on capital
requirements at the various subsidiaries. It is recognized that
AFG’s financial leverage is maintained within AM Best’s methodology
tolerance levels, and continues to be supportive of the ratings.
AFG also maintains coverage ratios that remain favorable to the
ratings.
A complete listing of American Financial Group, Inc.’s
subsidiaries’ FSRs, Long-Term ICRs and Long-Term IRs also is
available.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2022 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20221216005477/en/
Raymond Thomson, CPCU, ARe, ARM Associate Director
+1 908 439 2200, ext. 5621 raymond.thomson@ambest.com
Erik Miller, CFA Director +1 908 439 2200, ext.
5187 erik.miller@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 439 2200, ext. 5098 al.slavin@ambest.com
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