OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of AmTrust Financial Services, Inc. (AFSI) [NASDAQ:AFSI] (headquartered in New York) and all Long-Term Issue Credit Ratings assigned to AFSI-issued securities are unchanged by today’s announcement of AFSI’s issuance of $300 million in common equity. Similarly, the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a” of the members of the AmTrust Group and the FSR of A- (Excellent) and the Long-Term ICR of “a-” of AmTrust Title Insurance Company are also unchanged by the announcement. The outlook of these Credit Ratings (ratings) remains negative.
A.M. Best views the equity raise as a positive step that improves the tangible equity position of AFSI and enhances the company’s balance sheet strength. It is A.M. Best’s expectation that the proceeds will be downstreamed into AFSI’s regulated insurance operations to supplement risk-adjusted capitalization and support policyholder obligations.
Management has implemented a number of actions to address the material weaknesses in its financial reporting function and to bring greater focus to its insurance company operations. However, there is execution risk associated with these efforts, which is reflected in the continuing negative outlook on the ratings.
The negative rating outlook also reflects the potential for negative rating action should there be any material changes in AFSI’s financial leverage or interest coverage levels or any material change in the financial condition of any operating subsidiaries. The rating outlooks may be revised to stable upon resolution of the material weakness in AFSI’s internal controls and with continued improvements in risk-adjusted capitalization and the balance sheet quality of AFSI and its insurance operations, so long as there are no other material changes in the financial condition of any of the companies that would otherwise drive negative rating actions.
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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.