AM Best Downgrades Credit Ratings of American Southern Group's Members; Affirms Credit Ratings of Atlantic American Corporation and Bankers Fidelity Life Insurance Group's Members
AM Best has downgraded the Financial Strength Rating (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) to "a-" (Excellent) from "a" (Excellent) 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). Concurrently, AM Best has affirmed the Long-Term ICR of "bbb-" (Good) of the publicly traded parent company, Atlantic American Corporation (Atlantic American) (NASDAQ:AAME). The outlook of these Credit Ratings (ratings) has been revised to negative from stable. Additionally, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of "a-" (Excellent) of Bankers Fidelity Life Insurance Company, and its wholly owned and 100% reinsured subsidiaries, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company (collectively referred to as Bankers Fidelity Life Insurance Group [BFLIG]). The outlook of these ratings is stable. All companies are domiciled in Atlanta, GA, unless otherwise specified.
The ratings of American Southern Group reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating downgrades reflect the revision of American Southern Group's balance sheet strength assessment to strong from very strong, following a significant deterioration in its risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), as well as capital modeling and stress-testing capabilities that continue to evolve relative to the group's evolving risk profile. The decline in risk-adjusted capitalization to the strong level from strongest was driven by reserve strengthening and adverse reserve development in the group's commercial auto liability line of business. Management has indicated that additional reserve strengthening is expected in 2026. In addition, the group's largest account represents a significant concentration and lacks the structural reinsurance or retrospective premium protections present on other major accounts. Capital management and financial flexibility will remain important considerations in AM Best's prospective assessment of American Southern Group.
The negative outlooks reflect pressure on American Southern Group's risk-adjusted capitalization from reserve strengthening and adverse reserve development in commercial auto liability, as well as increased pressure on ERM given the group's evolving risk profile and ongoing capital management considerations.
The ratings of BFLIG 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.
BFLIG maintains a very strong level of risk-adjusted capitalization, as measured by BCAR, for its insurance, investment and business risks. Balance sheet strength is enhanced by access to an undrawn line of credit and adequate liquidity metrics. Despite volatile underwriting results over the last five years, the group has reported varying net income annually except for 2021. Operating performance has improved during this period due to rate increases, more stringent Medicare supplement underwriting and business diversification to lower risk ancillary health and life products. A new charter has enabled it to medically underwrite Medicare supplement policies, which has driven generally better underwriting performance in this segment. BFLIG's neutral business profile reflects the continued diversification of its business through growth of ancillary health and life revenue.
AM Best notes that Atlantic American filed a Form 12b-25 notification with the SEC regarding its 2025 Form 10-K, citing additional time needed to complete the adoption of ASU 2018-12 and related audit procedures; the company stated in the filing that it does not anticipate a significant change in results of operations from the corresponding prior-year period.
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 Performance Assessments, 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. For more information, visit www.ambest.com.
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Christine DePalma, CPCU, ARM
Financial Analyst
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