Credit: Shutterstock photoThe units of AmTrust Financial Services, Inc.AFSI recently received rating action from A.M. Best Company. The units - Springfield Insurance and Heritage Indemnity - were acquired by the company.
The rating agency has removed Springfield Insurance from under review with positive implications. Also, the credit rating giant upgraded the entity's financial strength rating (FSR) to A (Excellent) from B- (Fair) and the issuer credit rating (ICR) to "a" from "bb-". Concurrently, Heritage Indemnity was affirmed FSR of A (Excellent) and ICR of "a". Each of the aforementioned ratings carried a stable outlook.
The rating assignments came on the heels of the acquisition of Springfield Insurance and Heritage Indemnity by AmTrust Financial. The subsequent approval and execution of separate quota share reinsurance agreements between Springfield, Heritage and AmTrust International Insurance, Ltd. also contributed to the rating action. The risk-adjusted capitalization at both the acquired companies will be substantially boosted by the implementation of the quota share reinsurance agreements.
The ratings represent the financial flexibility and implied benefits that the acquired companies are expected to derive from AmTrust Financial. The credit rating giant expects the underwriting and operating efficacies of the acquired companies to improve after their integration into the operations of the acquirer. Thus, the acquisition by AmTrust Financial will enable these entities to match the level of expertise offered by their competitors.
AMTRUST FIN SVC Price
AMTRUST FIN SVC Price | AMTRUST FIN SVC Quote
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence on the stock as well as maintaining credit worthiness in the market. Hence, it is expected that such ratings will help the company instill and retain investor confidence in the future.
Zacks Rank and Stocks to Consider
Currently, AmTrust Financial carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the finance sector are Markel Corp. MKL , NMI Holdings, Inc. NMIH and National General Holdings Corp. NGHC . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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MARKEL CORP (MKL): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
