AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Atlantic American Corporation and Its Subsidiaries
AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "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). Additionally, AM Best has removed from under review with developing implications and 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 subsidiary, Bankers Fidelity Assurance Company (collectively referred to as Bankers Fidelity Life Insurance Group [BFLIG]). Concurrently, AM Best has removed from under review with developing implications and affirmed the Long-Term ICR of "bbb-" (Good) of the parent company, Atlantic American Corporation (Atlantic American) (NASDAQ:AAME). All companies are domiciled Atlanta, GA, unless otherwise specified. The outlook assigned to the Credit Ratings (ratings) is stable.
The ratings reflect Atlantic American's receival of a notification from the Nasdaq composite informing the company that is has regained compliance with Nasdaq listing rule 5250(c)(1)(the "Rule") based on the June 30, 2023, filing of the company's form 10-K for the year ended Dec. 31, 2022, and Form 10-Q for the period ended March 31, 2023. The ratings also reflect AM Best's analysis of the company's aforementioned 10-K and 10-Q financial reports.
The ratings of American Southern Group reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The ratings also reflect American Southern Group's strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), and historically profitable operating results as a result of management's disciplined underwriting approach and local market expertise. These positive rating factors are offset partially by the group's substantial annual stockholder dividend payments to the parent, which Atlantic American uses to service its debt.
The ratings also consider the financial leverage and interest coverage at Atlantic American, with an adjusted debt-to-capital ratio of 19.5% as of Dec. 31, 2022. The interest coverage ratios benefit from the trend of underwriting and operating earnings in the insurance operating companies.
The ratings of BFLIG reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM.
BFLIG has the strongest level of risk-adjusted capitalization, as measured by BCAR. BFLIG's capital and surplus has benefited from capital contributions from its parent company, Atlantic American, which has helped to neutralize the strain of new business development. AM Best expects explicit capital support from Atlantic American to continue as needed. Operating results have trended favorably in recent years as the organization instituted several measures to improve its underwriting experience within its Medicare supplement business. BFLIG's neutral business profile assessment reflects the continued diversification of its business mix through the expansion of its supplemental accident and health and life products.
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.
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