A.M. Best Affirms Ratings of Atlantic American Corporation and Its Subsidiaries Business Wire OLDWICK, N.J. -- October 30, 2013 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: AAME]. Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of “a-” 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 trend of deteriorating underwriting performance in recent years, the inherent risk associated with its significant premium growth that has occurred through the first half of 2013 and its history of paying substantial stockholder dividends that historically have been used to service the debt held at Atlantic American. The ratings of Bankers Fidelity recognize its solid risk-adjusted capitalization, its market niche providing insurance services to the senior market and its strategic importance to Atlantic American. The group’s ratings also consider the financial leverage and interest coverage of Atlantic American. Atlantic American’s adjusted debt-to-total capital as of June 30, 2013 was 19% and within A.M. Best’s guidelines for its current rating level. Interest coverage has historically been slightly below A.M. Best’s expectations for its current rating level; however, this is offset by the group’s ability to historically generate sufficient earnings to cover obligations at the parent. In addition, Atlantic American held roughly $27 million of cash and short-term investments and other marketable securities at June 30, 2013. While A.M. Best believes the ratings are well positioned at the current level, factors that may lead to negative rating actions for American Southern include a lack of underwriting discipline, which results in a further deterioration of underwriting and operating performance, or an erosion of surplus that causes a significant decline in risk-adjusted capital. Factors that could lead to negative rating actions for Bankers Fidelity include a decrease in its earnings and/or risk-adjusted capital, less strategic importance of Bankers Fidelity to the overall organization and the inability to overcome competitive challenges to successfully and profitably grow other ancillary lines of business. 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 www.ambest.com/ratings/methodology. 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED. Contact: A.M. Best Co. Michael Russo—P/C Senior Financial Analyst 908-439-2200, ext. 5372 firstname.lastname@example.org or David Mitchell—L/H Senior Financial Analyst 908-439-2200, ext. 5556 email@example.com or Rachelle Morrow Senior Manager, Public Relations 908-439-2200, ext. 5378 firstname.lastname@example.org or Jim Peavy Assistant Vice President, Public Relations 908-439-2200, ext. 5644 email@example.com
A.M. Best Affirms Ratings of Atlantic American Corporation and Its Subsidiaries
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