OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-” of American Federated Life Insurance Company (AFLIC) (Flowood, MS). The outlook for both ratings is stable.
AFLIC is a wholly owned subsidiary of First Tower LLC (First Tower), a multiline specialty finance company. The ultimate parent is Prospect Capital Corporation [NASDAQ: PSEC], a publicly-traded closed-end investment company, which acquired an 80.1% majority interest in First Tower Corp (AFLIC’s former parent) and its subsidiaries in June 2012.
The ratings reflect AFLIC’s adequate risk-adjusted capitalization, its continued profitable operating results and high quality investment portfolio. AFLIC provides credit life and credit accident and health insurance coverage for individuals that have personal loans originated by the consumer finance subsidiaries of First Tower.
AFLIC’s product and geographic concentration expose it to regulatory and legislative risks. The company recently expanded into Alabama and Illinois, giving it distribution capabilities in five states. Despite the still generally weak economy, the outlook reflects A.M. Best’s expectations that favorable earnings will continue to support operations while maintaining an adequate level of risk-adjusted capitalization over the near to medium term.
A.M. Best believes positive rating movement is unlikely in the foreseeable future. AFLIC’s ratings may face downward pressure if operating results deteriorate or it experiences a significant decline in capitalization due to losses or dividends to its parent.
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.
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