A.M. Best Co. reiterated the issuer credit rating (ICR) of
"bbb+" and all debt ratings of
American Financial Group, Inc.
). Subsequently, the rating agency reiterated the FSR of A
(Excellent) and ICR of "a" of Great American Insurance Companies.
The outlook remains stable.
The rating affirmations of Great American account for its sturdy
risk-adjusted capitalization, continued solid operational results
reflecting strong underwriting performances and varied lines of
However, these positives are dwarfed by considerable dividend
payments made to the parent company, higher common stock leverage
besides adverse loss development in certain lines of business.
Concurrently, A.M. Best reiterated the FSR of A+ (Superior) and
ICRs of "aa" of the property/casualty members of American Empire
Surplus Lines and FSR of A (Excellent) and ICRs of "a" of the
units of the Republic Indemnity Insurance Pool. The outlook
The ratings reflect excellent risk-adjusted capitalization,
sustained solid operating performance within the excess and
surplus lines marketplace (owing to underwriting profitability,
low-cost operating model and strong investment income) and
management's successful efforts to sail through different phases
of the market cycle. The ratings also account for financial
support provided by American Financial Group.
Nevertheless, the positive factors were overshadowed by the
affectability of the group's premium volume to the
property/casualty market, the brunt of lower premiums and the
higher dividends paid over the last five years.
Additionally, the rating agency revised the FSR upward to A+
(Superior) from A (Excellent) and the ICRs to "aa-" from "a+" of
the property/casualty members of the Mid-Continent Group.
However, the outlook moves to stable from positive.
The ratings upgrade came on the back of its dominant footprint,
sustained solid operating results, sturdy risk-adjusted
capitalization and financial support provided by American
Financial Group. However, geographic limitations of the business
and considerable dividend payment are drags on the positives.
A.M. Best might consider rating upgrades if the company and its
subsidiaries continue to perform in line with its peers, besides
maintaining sturdy risk-adjusted capitalization. Also, rating
upgrades of subsidiaries might trigger upward revision of the
parent company's ratings.
On the flip side, a dip in underwriting and operating results
subsequently affecting risk-adjusted capitalization or higher
leverage or lower interest coverage might lead to a ratings
American Financial Group carries a Zacks Rank #2 (Buy). Other
property & casualty insurers like
EMC Insurance Group Inc
Cincinnati Financial Corp.
Navigators Group Inc.
), carry a Zacks Rank #1 (Strong Buy) and are worth noting.
AMER FINL GROUP (AFG): Free Stock Analysis
CINCINNATI FINL (CINF): Free Stock Analysis
EMC INSURANCE (EMCI): Free Stock Analysis
NAVIGATORS GRP (NAVG): Free Stock Analysis
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