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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 27, 2017 08:31 PM (EST)
A.M. Best has revised the outlook to negative from stable and affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” and the Long-Term Issue Credit Ratings of AmTrust Financial Services, Inc. (AmTrust) (New York, NY) [NASDAQ:AFSI]. Concurrently, A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICRs of “a” for the members of the AmTrust Group. A.M. Best also has revised the outlook to negative from stable and affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of AmTrust Title Insurance Company (New York, NY).
The rating actions follow the disclosure of a delay in the filing of AmTrust’s annual report (10-K) due to a delay in completing its consolidated financial audit and assessment of internal controls, although still considered timely by the Securities and Exchange Commission. In addition, AmTrust has identified material weaknesses related to its internal controls over: the assessment of risks associated with financial reporting; and corporate accounting and corporate financial reporting resources within the company. While the specific items identified may not give rise to any material issues with respect to the financial reports themselves, they highlight the strain the organization’s substantial growth in recent years has placed on resources.
A.M. Best anticipates that AmTrust’s financials to be disclosed in its 10-K will be in line with those in its Feb. 27, 2017, news release. In addition, A.M. Best expects that the actions to address the concerns raised by its auditor will be sufficient to resolve the material weakness in the near term. However, the negative outlook reflects the potential for downward movement in the Credit Ratings (ratings) should there be material changes in AmTrust’s fourth-quarter financial results compared with the financial data released Feb. 27, 2017, or upon the disclosure of further material weaknesses prior to the resolution of those disclosed in the 2016 Form 10-K.
The rating outlooks for AmTrust and its subsidiaries may be revised to stable from negative upon resolution of the material weakness in AmTrust’s internal controls identified in its year-end 2016 audit, so long as there are no other material changes in the financial condition of any of the companies that would otherwise drive negative rating actions.
The ratings of AmTrust and its subsidiaries may be negatively impacted by material changes in AmTrust’s financial leverage or interest coverage levels that cause them to fall outside A.M. Best’s expectations for the current rating, or by any material change in the financial condition of any operating subsidiaries.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.