A.M. Best Comments on Credit Ratings of AmTrust Financial Services, Inc. and Subsidiaries Following Common Equity Raise
May 25 2017 - 5:52PM
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20170525006143/en/
A.M. BestJennifer Marshall, CPCU, ARM, +1 908-439-2200, ext.
5327Directorjennifer.marshall@ambest.comorMichael J. Lagomarsino,
CFA, FRM, +1 908-439-2200, ext. 5810Senior
Directormichael.lagomarsino@ambest.comorChristopher Sharkey, +1
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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