A.M. Best Raises Ratings and Assigns New Group Rating to the Specialty Auto Companies of American Financial Group.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 17, 2002 A.M. Best Co. has raised the financial strength ratings to A (Excellent) from A- (Excellent) for some of the core auto subsidiaries of American Financial Group, Inc. (NYSE NYSE See: New York Stock Exchange : AFG AFG Afghanistan (international vehicle registration) AFG American Financial Group AFG Assistance to Firefighters Grant AFG Arbeitsförderungsgesetz (German: Labor Advancement Law) AFG Accreditation for Growth ), Cincinnati, Ohio “Cincinnati” redirects here. For other uses, see Cincinnati (disambiguation). Cincinnati is a city in the U.S. state of Ohio and the county seat of Hamilton County. . Additionally, A.M. Best assigned a financial strength rating of A (Excellent) to a new group, Specialty Auto Group, of which these subsidiaries are now members. These ratings reflect Specialty Auto's solid capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. overall operating performance and strong non-standard automobile market presence. The group's solid capital position is driven by moderate investment risk profile, commitment to loss reserve adequacy and conservative underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. leverage. Despite the downturn in underwriting experienced in recent years related to a sharp increase in claim severity and frequency in key operating territories, the group's five-year average combined ratio approximates the industry composite average. Historical underwriting profitability is attributable to management's product expertise, local market knowledge and utilization of sophisticated technologies within the pricing, risk selection and claims handling processes. Underwriting returns are also aided by the group's low cost operating structure, which is partially facilitated by technology and consolidations of select back office functions. Finally, the ratings recognize the group's strong non-standard private passenger automobile market presence as one of the top non-standard insurance groups in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , with net premiums written of $724 million. Somewhat offsetting these positive factors are the earnings fluctuations due to localized Translated into the spoken language of the country. See localization. competitive market conditions and fraud activity prevalent in some key non-standard automobile markets. The group's premium is focused in three key states: California, Florida and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , which represent approximately 50% of the total book of business. The operating climate in these states has trended very poorly over recent years due to high competition and increasing claim costs, particularly within New York and Florida's personal injury protection market. However, the group has pursued aggressive premium rate increases, tightened underwriting guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. and will benefit from recent price firming throughout non standard auto markets. Additionally, the parent organization, American Financial Group, Inc., and its subsidiaries maintain high financial leverage and low fixed coverage ratios. A.M. Best does not anticipate a significant reduction in financial leverage, thereby placing greater emphasis on the group's need to generate sustainable earnings and cash flows for debt service. Nonetheless, A.M. Best views the rating outlook as stable due to the group's excellent capitalization, historically favorable operating results and solid non-standard automobile market position. The group financial strength rating of A (Excellent) has been assigned to the following members of the Specialty Auto Group with a stable outlook: -- American Deposit Insurance Company -- American Premier Insurance Company -- Atlanta Casualty Company -- Atlanta Reserve Insurance Company -- Atlanta Specialty Insurance Company -- Coventry Insurance Company -- Infinity Insurance Company -- Infinity National Insurance Company -- Infinity Select Insurance Company -- Leader Insurance Company -- Leader Preferred Insurance Company -- Leader Specialty Insurance Company -- Regal Insurance Company -- TICO Insurance Company -- Windsor Insurance Company A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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