A.M. Best Affirms Ratings of Atlantic American Corporation and Upgrades Ratings of Bankers Fidelity Life Insurance Company

  A.M. Best Affirms Ratings of Atlantic American Corporation and Upgrades
  Ratings of Bankers Fidelity Life Insurance Company

Business Wire

OLDWICK, N.J. -- October 16, 2012

A.M. Best Co. has affirmed the financial strength rating (FSR) of A
(Excellent) and issuer credit ratings (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). Concurrently, A.M. Best has affirmed the ICR of “bbb-” of
the parent company, Atlantic American Corporation (Atlantic American) (NASDAQ:

Additionally, A.M. Best has upgraded the FSR to A- (Excellent) from B++ (Good)
and ICR to “a-” from "bbb+" of Bankers Fidelity Life Insurance Company
(Bankers Fidelity). The outlook for all ratings is stable. All companies are
domiciled in Atlanta, GA, unless otherwise specified.

American Southern’s ratings reflect its strong risk-adjusted capitalization,
conservative balance sheet, long history of profitability, management’s
disciplined underwriting approach and its local market knowledge. Somewhat
offsetting these positive rating factors is American Southern’s history of
paying substantial stockholder dividends, which historically have been used to
service the debt held at Atlantic American, and its trend of deteriorating
underwriting performance in recent years.

The upgrading of Bankers Fidelity’s ratings recognizes its strong
risk-adjusted capital position, improved financial results, continued business
diversification strategy and its strategic importance to Atlantic American.
The company continues to focus on the sale of senior life and niche individual
life business, while maintaining its core Medicare supplement presence.
Although the worksite arena is quite competitive, A.M. Best views favorably
Bankers Fidelity’s longer term emphasis on the development of a complete
worksite marketing channel.

The group’s ratings also consider the financial leverage and interest coverage
of Atlantic American; adjusted debt-to-total capital and interest coverage
ratios are currently about 21% and 2-3 times, respectively. Interest coverage
is slightly below expectations for the given rating level; however, this is
offset by the insurance companies’ ability to historically generate sufficient
earnings to cover obligations at the parent. In addition, Atlantic American
held roughly $26 million of cash and short-term investments and other
marketable securities at June 30, 2012. A.M. Best expects Atlantic American to
continue paying shareholder dividends at roughly the same level as seen in
recent years.

While A.M. Best believes the group's ratings are well positioned at current
levels, factors that may lead to negative rating actions include a lack of
underwriting discipline, which results in a trend of increasingly
deteriorating underwriting and operating performance to a level below peers,
or an erosion of surplus that causes a significant decline in risk-adjusted

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
Michael Russo—P/C, 908-439-2200, ext. 5372
Senior Financial Analyst
Jeffrey Lane—L/H, 908-439-2200, ext. 5567
Managing Senior Financial Analyst
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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