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) [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). The outlook of these
ratings is stable. In addition, AM Best has assigned a FSR of A+
(Superior) and a Long-Term ICR of “aa-” (Superior) to Bridgefield
Indemnity Insurance Company, a newly added member of Great American
Contemporary. The outlook assigned to these ratings is stable. The
Republic companies are headquartered in Calabasas, CA, and certain
Bridgefield companies are 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
these ratings is stable.
All companies are subsidiaries of AFG and headquartered in
Cincinnati, OH, unless otherwise specified. (Please see 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 very strong, 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 assessed in either the strongest or very strong
category, as measured by Best’s Capital Adequacy Ratio (BCAR), with
little volatility. Great American also has shown 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 vast expertise within 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,
based on historical support and services. 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, the
group’s members rank as the second-largest collective workers’
compensation provider in Florida through an extensive network of
independent agents and advisers. Despite its leadership position,
the group remains concentrated in Florida and California, which
exposes the group to potential 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 and
services. 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 with 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, recognizing the historical support and
services. 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 through continued strong underwriting results.
Offsetting factors include a high dividend payout to its parent,
and a 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 appropriate to the
ratings.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-”
(Superior) have been affirmed, each with a stable outlook, for
Great American Insurance Company and its following pooled
affiliates:
- Great American Alliance Insurance Company
- Great American Assurance Company
- Great American Casualty Insurance Company
- Great American E & S Insurance Company
- Great American Fidelity Insurance Company
- Great American Insurance Company of New York
- Great American Protection Insurance Company
- Great American Security Insurance Company
- Great American Spirit Insurance Company
- American Empire Insurance Company
- Great American Risk Solutions Surplus Lines Insurance
Company
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-”
(Superior) have been affirmed, each with a stable outlook, for the
following P/C insurance members of Mid-Continent Group:
- Mid-Continent Assurance Company
- Mid-Continent Casualty Company
- Oklahoma Surety Company
- Mid-Continent Excess and Surplus Insurance Company
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-”
(Superior) have been affirmed, each with a stable outlook, for the
following P/C members of National Interstate Group:
- National Interstate Insurance Company
- National Interstate Insurance Company of Hawaii, Inc.
- Triumphe Casualty Company
- Vanliner Insurance Company
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-”
(Superior) have been affirmed, each with a stable outlook for the
following P/C members of Great American Contemporary Pool:
- Great American Contemporary Insurance Company
- Republic Indemnity Company of America
- Republic Indemnity Company of California
- Bridgefield Employers Insurance Company
- Bridgefield Casualty Insurance Company
The FSR of A+ (Superior) and the Long-Term ICR of “aa-”
(Superior) has been assigned, each with a stable outlook, to
Bridgefield Indemnity Insurance Company, a new member of Great
American Contemporary Pool.
The Long-Term ICR of “a-” (Excellent) has been affirmed with a
stable outlook for American Financial Group, Inc.
The following Long-Term IRs have been affirmed with stable
outlooks:
American Financial Group, Inc. — -- “bbb+” (Good) on $200
million 4.5% subordinated debentures, due 2060 -- “bbb+” (Good) on
$150 million 5.625% subordinated debentures, due 2060 -- “bbb+”
(Good) on $125 million 5.875% subordinated debentures, due 2059 --
“bbb+” (Good) on $200 million 5.125% subordinated debentures, due
2059 -- “a-” (Excellent) on $590 million 4.5% senior unsecured
notes, due 2047 (of which $567 remains outstanding) -- “a-”
(Excellent) on $300 million 5.25% senior unsecured notes, due 2030
(of which $253 remains outstanding)
The following indicative Long-Term IRs have been affirmed with
stable outlooks under the shelf registration:
American Financial Group, Inc.— -- “a-” (Excellent) on senior
unsecured debt -- “bbb+” (Good) on subordinated debt -- “bbb”
(Good) on preferred stock
American Financial Capital Trust II, III & IV— -- “bbb”
(Good) on preferred securities
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.
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Raymond Thomson, CPCU, ARe, ARM Associate Director +1
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