AM Best


AM Best Affirms Credit Ratings of American Financial Group, Inc. and Its Key Operating Subsidiaries


CONTACTS:

Raymond Thomson, CPCU, ARe, ARM
Associate Director
+1 908 439 2200, ext. 5621
raymond.thomson@ambest.com

Erik Miller, CFA
Associate Director
+1 908 439 2200, ext. 5187
erik.miller@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - DECEMBER 03, 2021 03:46 PM (EST)
AM Best has affirmed 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 pooling affiliates, collectively referred to as Great American Insurance Companies (Great American). Concurrently, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) and affirms the Long-Term Issue Credit Ratings (Long-Term IRs) of American Financial Group, Inc. (AFG) (Cincinnati, OH). The outlook of these Credit Ratings (ratings) is stable.

At the same time, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of the property/casualty (P/C) members of the Great American Contemporary Pool (collectively, Great American Contemporary and formerly known as Republic and Summit Insurance Pool). The outlook of these ratings is stable.

AM Best also has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of the P/C members of the Mid-Continent Group (Mid-Continent) (headquartered in Tulsa, OK). Additionally, AM Best has affirmed 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 of the aforementioned ratings is stable.

All companies are subsidiaries of AFG and headquartered in Cincinnati, OH, unless otherwise specified.

(Please see link below for a detailed listing of the P/C companies and ratings.)

The ratings of Great American reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Great American’s ratings are aided by its risk-adjusted capital, which has been assessed consistently in recent years in the strongest category, as measured by Best’s Capital Adequacy Ratio (BCAR), with little volatility. Great American also has consistent operating performance on par with peers similarly assessed at strong, which is reflective of its profitable underwriting results that are supported by a diversified product portfolio and business profile through its multiple distribution platforms. An offsetting factor is a high dividend payout ratio to the parent company.

The ratings of Great American Contemporary reflect their balance sheet strength, which AM Best assesses as very strong, as well as their strong operating performance, neutral business profile and appropriate ERM. The ratings of Republic and Summit also reflect rating lift from the lead rating unit, Great American. Republic and Summit maintain risk-adjusted capital at the strongest level, as measured by BCAR, which is supported by consistently strong operating performance that despite some underwriting volatility has remained profitable over the past five years and outperformed composite peers. Despite its more narrow focus in the workers’ compensation segment, the group is among the market leaders in its focused geographical areas, in particular, ranking as the largest provider in Florida through 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. The group members also maintain higher underwriting leverage than peers with a high dividend payout to its parent, tempering surplus growth.

The ratings of Mid-Continent reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also reflect ratings lift from the lead rating unit, Great American, recognizing the historical support provided by ultimate parent, AFG, to Mid-Continent. Mid-Continent’s ratings are supported by its strongest risk-adjusted capital position, as measured by BCAR, and consistent ability to maintain this level of capital support through positive organic operating earnings. These factors are offset by its more concentrated earning segments and limited geographical profile, which exposes the group to increased regulatory, legislative and competitive risks.

The ratings of National Interstate reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate ERM. The ratings also reflect lift from the lead rating unit, Great American. National Interstate’s ratings are supported by risk-adjusted capitalization assessed at the strongest level, as measured by BCAR, a prudent investment portfolio and high quality of reinsurance partners. The group has shown significant expertise in its niche-focused market of captive risk transfer products for the transportation market, and despite this more limited focus, it has demonstrated consistent favorable operating results on par with peers with a similar balance sheet assessment of strong through strong underwriting results. Offsetting factors include a high dividend payout to its parent, and a more concentrated market focus.

Each of the groups discussed above also benefits from the financial flexibility provided by AFG, which has additional liquidity sources given its access to capital markets and lines of credit. AM Best expects that earnings and cash flows from AFG’s operating subsidiaries will allow it to support risk-adjusted capitalization, should the need arise. At the same time, surplus growth at each group has been limited over the past five years by the payment of significant stockholder dividends to AFG. These dividends vary based on capital needs at the various subsidiaries. It is recognized that AFG’s financial leverage is maintained within AM Best’s methodology tolerance levels, and continues to be supportive of the ratings. Several new debt issuances in recent years have been offset by the proceeds of 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 ratings.

A complete listing of American Financial Group, Inc.’s subsidiaries’ FSRs, Long-Term ICRs and Long-Term IRs also is available.

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 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.


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