OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of American Southern Insurance Company (Topeka, KS) and its wholly owned and 100% reinsured subsidiary, American Safety Insurance Company (collectively referred to as American Southern Group). Concurrently, A.M. Best has affirmed the Long-Term ICR of “bbb-” of the parent company, Atlantic American Corporation (Atlantic American) [NASDAQ: AAME].
A.M. Best also has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” of Bankers Fidelity Life Insurance Company and its wholly owned and 100% reinsured subsidiary, Bankers Fidelity Assurance Company (formerly known as Direct Life Insurance Company) (collectively referred to as Bankers Fidelity Life Insurance Group). The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Atlanta, GA, unless otherwise specified.
American Southern Group’s ratings reflect its strong risk-adjusted capitalization, conservative balance sheet, long history of operating profitability, management’s disciplined underwriting approach and its local market knowledge. Somewhat offsetting these positive rating factors is the group’s history of paying substantial stockholder dividends, which historically have been used to service the debt held at Atlantic American.
Bankers Fidelity Life Insurance Group’s ratings reflect its sound risk-adjusted capitalization level, strategic importance to its insurance holding company parent, Atlantic American, and execution of its business diversification/expansion strategy. Partially offsetting these strengths are highly competitive markets for its products, an overall lack of growth in absolute capital and surplus in recent years and an investment exposure.
The ratings also consider the financial leverage and interest coverage at Atlantic American. Atlantic American’s adjusted debt-to-total capital as of June 30, 2016, was 16.6% and within A.M. Best’s guidelines for its current rating level. Interest coverage historically has been slightly below A.M. Best’s expectations for its current rating level; however, this is offset by the group’s ability to generate sufficient earnings historically to cover obligations at the parent. In addition, Atlantic American held roughly $18 million of cash and short-term investments, and other marketable securities as of June 30, 2016.
Negative rating actions could occur for American Southern Group if there is significant deterioration in underwriting results over the near term, or if risk-adjusted capitalization were to decline significantly.
Positive rating actions could occur for Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company if their parent holding company’s property/casualty operations receive rating enhancement. Conversely, negative rating actions could occur if there is a trend of declining premium revenue or operating losses, a materially weakened risk-adjusted capital position or a loss of parental support.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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