AM Best Affirms Credit Ratings of Atlantic American Corporation and Its Subsidiaries
AM Best has affirmed the Financial Strength Rating (FSR)
of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term
ICR) of “a” 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-” 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-” of
the parent company, Atlantic American Corporation (Atlantic
American) [NASDAQ: AAME]. The outlook of these Credit Ratings
(ratings) are stable. All companies are domiciled in Atlanta GA,
unless otherwise specified.
The ratings reflect American Southern Group’s balance sheet
strength, which AM Best categorizes as very strong, as well as its
adequate operating performance, neutral business profile and
appropriate enterprise risk management (ERM). The ratings also
reflect the group’s long history of operating profitability,
management’s disciplined underwriting approach and its local market
knowledge. American Southern Group’s balance sheet strength
assessment reflects risk-adjusted capitalization that is at the
strongest level, as measured by Best’s Capital Adequacy Ratio
(BCAR), partially offset by the group’s payment of substantial
stockholder dividends, which historically have been used to service
debt held at Atlantic American.
The ratings also consider the financial leverage and interest
coverage at Atlantic American, with its adjusted debt-to-total
capital at 15.5% as of Dec. 31, 2019. Interest coverage
historically has been supported adequately by the insurance
operating companies’ ability to generate sufficient earnings to
cover debt service obligations at the parent.
The ratings of BFLIG reflect its balance sheet strength, which
AM Best categorizes as very strong, as well as its marginal
operating performance, neutral business profile and appropriate
The group has benefited from explicit capital support from
Atlantic American over the last several years. Infusions have
helped to maintain capital strength as new business development has
strained capital, and AM Best expects that the parent organization
will continue to support BFLIG. Over the past four years, the group
has incurred increasingly higher underwriting losses and expenses,
in addition to related required reserve increases, due to its
Medicare supplement business development and growth strategy. In
response, the group has implemented several initiatives to restore
the profitability of its Medicare supplement segment, including
rate increases, adjustments to distribution and related
compensation and underwriting practice changes.
Additionally, BFLIG is now strategically expanding its
supplemental worksite business to additional states and marketing
new, redesigned individual supplemental accident and health
products to diversify its business mix.
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 media use of
Best’s Credit Ratings and AM Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and AM Best
Rating Action Press Releases.
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 New York, London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
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