A.M. Best Affirms Ratings of Atlantic American Corporation and Its Subsidiaries

  A.M. Best Affirms Ratings of Atlantic American Corporation and Its

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:

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

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

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.


A.M. Best Co.
Michael Russo—P/C
Senior Financial Analyst
908-439-2200, ext. 5372
David Mitchell—L/H
Senior Financial Analyst
908-439-2200, ext. 5556
Rachelle Morrow
Senior Manager, Public Relations
908-439-2200, ext. 5378
Jim Peavy
Assistant Vice President, Public Relations
908-439-2200, ext. 5644
Press spacebar to pause and continue. Press esc to stop.