|Joni Cerbone |
Senior Financial Analyst
+1 908 882 1690
+1 908 882 2261
Associate Director, Public Relations
+1 908 882 2310
Senior Public Relations Specialist
+1 908 882 2318
FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 05, 2023 12:11 PM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” (Excellent) of American Family Mutual Insurance Company, S.I. (American Family) (Madison, WI) and its affiliates. In addition, AM Best has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of “a-” (Excellent) of the $70 million, 7.25%, 20-year surplus notes of NGM Insurance Company (Jacksonville, FL), an American Family affiliate. Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of American Family Life Insurance Company (AFLIC) (Madison, WI). The outlook of the FSR is stable while the outlook of the Long-Term ICRs and Long-Term IR is negative. (See below for a detailed listing of the companies and Credit Ratings [ratings].)
The ratings of American Family reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The ratings are supported by American Family’s risk-adjusted capitalization, which AM Best considers to be at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). Investment income continues to drive the company’s operating performance, as underwriting results continue to be volatile. Underwriting results have been impacted by catastrophe losses due to severe weather events in the Midwest in recent years, particularly where the company has a large market share, and combined ratios are pressured by rising indemnity costs. Results also have been significantly impacted by economic volatility and inflation. The company continues to address the challenging economic trends through significant rate increases along with other extensive underwriting actions. American Family is a multi-state, multi-line writer. Its product mix, distribution channels and geographic mix have become more diverse through mergers and acquisitions activity over the past decade, which further supports the business profile assessment.
Continuation of the negative Long-Term ICR outlook for American Family reflects the significant earnings deterioration in 2022, which continued through the first half of 2023. The earnings deterioration and challenging macro-economic trends also have resulted in significantly reduced capital levels.
The ratings of AFLIC reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM.
AFLIC’s risk-adjusted capitalization remains at the strongest level, as measured by BCAR. AFLIC has shown consistent profitability on operating and net income levels. Overall operating results have supported a stockholder dividend in most years.
Continuation of the negative Long-Term ICR outlook for AFLIC primarily reflects the overall business structure of the members of American Family. As AFLIC has a strong association with the property/casualty operations and currently receives lift from the lead rating unit, any change in the rating assigned to American Family will have a corresponding effect on AFLIC’s ratings.
The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed, the outlook for the FSR is stable while the outlook for the Long-Term ICRs is negative for the following affiliates of American Family Mutual Insurance Company, S.I.:
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.