Best’s News & Research Service - March 10, 2023 08:24 AM (EST)
AM Best Affirms Credit Ratings of Atlantic American Corporation and Its Subsidiaries
- March 10, 2023 08:24 AM (EST)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) 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-” (Excellent) 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-” (Good) 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 of American Southern Group reflect its 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 reflect American Southern Group’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), historically profitable operating results, management’s disciplined underwriting approach and local market expertise. These positive rating factors are partially offset by the group’s substantial annual stockholder dividend payments to the parent, which Atlantic American uses to service its debt.
The ratings also consider the financial leverage and interest coverage at Atlantic American, with an adjusted debt-to-capital ratio of 20.8% at Sept. 30, 2022. The interest coverage ratios benefit from the trend of underwriting and operating earnings in the insurance operating companies.
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.
BFLIG has the strongest level of risk-adjusted capitalization, as measured by BCAR, which supports its insurance and investment risks. This group’s capital and surplus has benefited from explicit capital support provided by its parent company, Atlantic American, which has helped to maintain capital strength and offset strain of new business growth. AM Best expects Atlantic American to continue to provide capital support to BFLIG as needed. BFLIG generated favorable earnings in 2022 after a modest net loss in 2021. Results have improved in recent years after the organization implemented various measures to improve underwriting experience in its Medicare supplement business, including rate increases, enhanced data and analytics, and underwriting practice changes. BFLIG’s neutral business profile assessment reflects the continued diversification of its business mix through expansion of its supplemental accident and health and life products.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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.