AM Best confirms credit ratings of American Financial Group, Inc. and its major operating subsidiaries


OLDWICK, NJ, December 03, 2021– (COMMERCIAL THREAD) –AM Best confirmed the financial strength rating (FSR) of A + (superior) and the long-term issuer credit ratings (long-term ICR) of “aa-” (superior) of Great American Insurance Company and its affiliates of pool, collectively referred to as the Great American Insurance Companies. Concurrently, AM Best confirmed the long-term ICR of “a-” (Excellent) and the long-term issue credit (long-term IR) ratings of American Financial Group, Inc. (AFG) (Cincinnati , OH). The outlook for these credit ratings (ratings) is stable.

At the same time, AM Best confirmed the FSR of A + (Superior) and the long-term ICRs of “aa-” (Superior) of the IARD (P / C) members of the Great American Contemporary Pool (collectively, Great American Contemporary and formerly known as the Republic and Summit Insurance Pool). The outlook for these ratings is stable.

AM Best also confirmed the FSR of A + (Superior) and the long term ICR of “aa-” (Superior) of the P / C members of the Mid-Continent (Mid-Continent) group (head office in Tulsa, OK). Additionally, AM Best has confirmed the FSR of A + (Superior) and the long-term ICRs of “aa-” (Superior) of National Interstate Insurance Company (headquartered in Richfield, OH) and its affiliates (collectively referred to as National Interstate ). The outlook for the above ratings is stable.

All companies are subsidiaries of AFG and are headquartered in Cincinnati, OH, unless otherwise noted. (Please see the link below for a detailed list of P / C companies and ratings.)

Great American’s ratings reflect the strength of its balance sheet, which AM Best considers the strongest, as well as its strong operational performance, favorable business profile and appropriate enterprise risk management (ERM).

Great American’s ratings are facilitated by its risk-adjusted capital, which has been rated regularly in recent years in the highest category, as measured by Best’s capital adequacy ratio (BCAR), with a low volatility. Great American also displays consistent operating performance comparable to its peers similarly rated as strong, reflecting its profitable underwriting results which are supported by a diverse product portfolio and business profile through its multiple distribution platforms. . A compensating factor is a high dividend payout ratio to the parent company.

Great American Contemporary’s ratings reflect the strength of their balance sheet, which AM Best considers to be very strong, as well as their strong operating performance, neutral business profile and appropriate ERM. The ratings of Republic and Summit also reflect the increase in ratings of the primary rating unit, Great American. Republic and Summit maintain risk-adjusted capital at the highest level, as measured by BCAR, which is supported by continued strong operational performance which, despite some underwriting volatility, has remained profitable over the past five years and outperformed their composite peers. Despite its closer focus in the workers’ compensation segment, the group is among the market leaders in its targeted geographies, in particular, ranking as the largest supplier in Florida thanks to an extensive network of independent agents and advisers. Despite its leadership position, it remains concentrated in Florida and California, which exposes the group to regulatory and legislative risks. Group members also maintain higher underwriting leverage than their peers with a high dividend payout to its parent company, tempering excess growth.

Mid-Continent’s ratings reflect the strength of its balance sheet, which AM Best considers very strong, as well as its adequate operational performance, neutral business profile and appropriate ERM. The ratings also reflect the increase in ratings of the primary rating unit, Great American, recognizing the historic support provided by the ultimate parent company, AFG, to Mid-Continent. Mid-Continent’s ratings are underpinned by its strongest risk-adjusted capital position, as measured by BCAR, and its continued ability to maintain this level of capital support through positive organic operating income. These factors are offset by its more concentrated revenue segments and limited geographic profile, which expose the group to increased regulatory, legislative and competitive risks.

National Interstate’s ratings reflect the strength of its balance sheet, which AM Best considers very strong, as well as its strong operational performance, neutral business profile and appropriate ERM. The ratings also reflect the increase in the primary rating unit, Great American. National Interstate’s ratings are underpinned by highest-rated risk-adjusted capitalization as measured by BCAR, a conservative investment portfolio and high quality reinsurance partners. The group has demonstrated great expertise in its niche market of captive risk transfer products for the transport market, and despite this more limited concentration, it has demonstrated consistent favorable operating results comparable to those of its peers with a similar balance sheet assessment of strong to strong underwriting results. Offsetting factors include a high dividend payout to its parent company and a more concentrated market focus.

Each of the groups mentioned above also benefits from the financial flexibility offered by AFG, which has additional sources of liquidity given its access to capital markets and credit lines. AM Best expects earnings and cash flow from AFG’s operating subsidiaries to support risk-adjusted capitalization, should the need arise. At the same time, the growth of each group’s surplus has been constrained over the past five years by the payment of large shareholder dividends to AFG. These dividends vary according to the capital needs of the various subsidiaries. It is recognized that AFG’s financial leverage is maintained within AM Best’s methodological tolerance levels and continues to support ratings. Several new debt issuances in recent years have been offset by the proceeds from the sale of the Great American Life Group and Manhattan National Life Insurance Company to Massachusetts Mutual Life Insurance Company (MassMutual) earlier in 2021. AFG maintains coverage ratios that remain favorable to the odds.

A complete list American Financial Group, Inc. Subsidiary FSRs, Long-Term ICRs, and Long-Term IRs is also available.

This press release relates to credit ratings published on the AM Best website. For all rating information relating to the publication and relevant disclosures, including details of the office responsible for the publication of each of the individual ratings referenced in this publication, please see AM Best Recent rating activity Web page. For more information on the use and limits of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s credit scores, Best’s preliminary credit reports, and AM Best’s press releases, please see Guide to Proper Use of Best Ratings and Reviews.

AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based in the United States, the company operates in more than 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 AM Best Rating Services, Inc. and / or its affiliates. ALL RIGHTS RESERVED.

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Contacts

Raymond Thomson, CPCU, ARe, ARM
Associate Director
+1 908 439 2200, ext. 5621
[email protected]

Erik Miller, CFA
Associate Director
+1 908 439 2200, ext. 5187
[email protected]

Christophe sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
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Jim peavy
Director, Communications
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