A.M. Best ups ratings

Mississippi Business Journal, The, Jun 04, 2007

FLOWOOD - A.M. Best Co. has upgraded the financial strength ratings (FSR) to "B (Good)" from "B (Fair)" and assigned issuer credit ratings (ICR) of "bbb-" to American Federated Insurance Company (AFIC) and American Federated Life Insurance Company (AFLIC). The outlook for the FSRs has been revised to stable from positive, while the outlook assigned to the ICRs is stable.

A.M. Best said the FSR upgrade for AFIC "reflects its solid risk-adjusted capitalization, historically profitable underwriting and operating performance and disciplined underwriting approach. These positive rating factors are somewhat offset by AFIC's product and geographic concentration, which exposes it to judicial, regulatory and legislative risks and weather related events. Also, the company continues to pay significant stockholder dividends to its parent, First Tower Corporation. However, these dividends are paid in lieu of commissions to producing agents.

"The FSR upgrade for AFLIC reflects its adequate level of risk-adjusted capitalization, continued growth in both direct and net premiums written and its consistently positive earning performance. Offsetting these positive rating factors are the modest business profile and declining absolute capital levels of AFLIC owing to ongoing dividend payments."

The outlook reflects A.M. Best's expectation that strong earnings will continue to support operations while maintaining an adequate level of risk-adjusted capitalization over the near to mid term.