AM Best Affirms Credit Ratings of Atlantic American Corporation and Its Subsidiaries
April 22 2021 - 3:48PM
Business Wire
AM 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). Additionally, AM Best 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 (collectively
referred to as Bankers Fidelity Life Insurance Group [BFLIG]).
Concurrently, AM Best has affirmed the Long-Term ICR of “bbb-” of
the parent company, Atlantic American Corporation (Atlantic
American) [NASDAQ: AAME]. The outlook of these Credit Ratings
(ratings) is stable. All companies are domiciled Atlanta, GA,
unless otherwise specified.
The ratings reflect American Southern Group’s balance sheet
strength, which AM Best assesses as very strong, as well as its
adequate operating performance, neutral business profile and
appropriate enterprise risk management (ERM).
The ratings also incorporate the group’s consistent trend of
operating profitability, management’s disciplined underwriting
approach and its local market expertise. American Southern Group’s
balance sheet strength assessment reflects risk-adjusted
capitalization that ranks at the strongest level, as measured by
Best’s Capital Adequacy Ratio (BCAR), partially offset by the
group’s payment of substantial stockholder dividends, which
Atlantic American historically uses to service its debt.
The ratings also consider the financial leverage and interest
coverage at Atlantic American, with its adjusted debt-to-total
capital at 14.3% as of Dec. 31, 2020. Interest coverage
historically receives adequate support from the insurance operating
companies to cover debt service obligations at the parent, given
the companies’ ability to generate sufficient earnings.
The ratings of BFLIG reflect its balance sheet strength, which
AM Best assesses as very strong, as well as its marginal operating
performance, neutral business profile and appropriate ERM.
The group has benefited over the last several years from
explicit capital support provided by its parent company, Atlantic
American Corporation. Infusions have helped to maintain capital
strength as new business development had strained capital, and AM
Best expects that the parent organization will continue to support
the group. BFLIG returned to operating profitability in 2020 after
having implemented initiatives in prior years to improve the
underwriting performance of its Medicare supplement business,
including adjustments to distribution and related compensation,
underwriting practice changes and rate increases. In the four years
prior to 2020, the group had reported increasingly higher
underwriting losses and expenses, in addition to related required
reserve increases, from business development and growth strategy in
its Medicare supplement segment. BFLIG is now marketing new,
redesigned individual supplement accident and health products to
diversify its business mix, and continues to expand its
supplemental worksite business strategically to more states.
This press release relates to Credit Ratings that have been
published on AM 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 AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper media use of Best’s
Credit Ratings and AM Best press releases, please view Guide for
Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Christine DePalma Financial Analyst—P/C +1 908 439 2200, ext.
5649 christine.depalma@ambest.com
Brian Virostek Financial Analyst—L/H +1 908 439 2200, ext. 5531
brian.virostek@ambest.com
Christopher Sharkey Manager, Public Relations +1 908 439 2200,
ext. 5159 christopher.sharkey@ambest.com
Jim Peavy Director, Communications +1 908 439 2200, ext. 5644
james.peavy@ambest.com
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