AM Best Affirms Credit Ratings of Atlantic American Corporation and Its Subsidiaries
AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (ICR) of 'a' for American Southern Insurance Company and its subsidiary. The FSR of A- (Excellent) and ICRs of 'a-' were also affirmed for Bankers Fidelity Life Insurance Company. Atlantic American Corporation (NASDAQ: AAME) received a Long-Term ICR of 'bbb-'. The outlook for all ratings is stable, reflecting strong balance sheet strength, adequate operating performance, and disciplined underwriting, despite some financial leverage and dividends paid to service debt.
- AM Best affirmed the FSR of A (Excellent) for American Southern Insurance Company and its subsidiary.
- The affirmed rating signifies a very strong balance sheet strength and adequate operating performance.
- Atlantic American Corporation's Long-Term ICR of 'bbb-' demonstrates stability in creditworthiness.
- BFLIG returned to operating profitability in 2020 after improving underwriting practices.
- BFLIG faced higher underwriting losses prior to returning to profitability.
- The payment of substantial stockholder dividends has implications for debt servicing.
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
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
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.
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FAQ
What did AM Best affirm for Atlantic American Corporation (AAME)?
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