Fitch Ratings Affirms American Family's 'AA' IFS Ratings.Business Editors CHICAGO--(BUSINESS WIRE)--July 29, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the 'AA' insurer financial strength rating of American Family American Family is a photographic artwork exhibition by Renée Cox. See also
Please [ improve this article] or discuss the issue on the talk page. , Inc. (AFFS AFFS Academy for Future Science (Los Gatos, CA) AFFS Army Field Feeding System AFFS Amphibious Floating Bridge and Ferry System (India) AFFS Air Force Family Services ), a subsidiary primarily engaged in the business of making consumer loans and providing lines of credit. The very strong insurer financial strength rating reflects the group's excellent market position and brand name, exceptional capitalization and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. expense structure. Partially offsetting these positives are recent poor operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before , limited geographic diversification and larger than industry average exposure to common stocks. American Family has a solid brand name and exceptional franchise value in their target market, which is currently 17 states predominately in the Midwest. The company looks to provide a high level of service and broad range of quality products to customers. American Family predominantly sells individual automobile and homeowners insurance, but also offers health, commercial lines coverage, life insurance and consumer loans. Geographic diversification of the company's insured portfolio is somewhat limited, in that the top five states (Wisconsin, Missouri, Minnesota, Illinois, and Colorado) accounted for about 70% of premiums written in 2001. However, diversification should improve somewhat going forward as the company continues its growth strategy of selectively expanding into new states at a moderate and controlled pace, ultimately seeking to be one of the market leaders in the states they operate. 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. results have not been particularly good in recent years, with a five year (1997-2001) average combined ratio of 108.0%, including 114.4% posted in 2001. Significant catastrophe claims, primarily from Midwest storms, which have been unusually high in frequency and severity the last several years, were responsible for earnings shortfalls in 1998, 2000, and 2001. Reserve strengthening in personal automobile lines affected 1999 results. Positively, the company's 2001 expense ratio of 22.8% continues to be among the lowest of the larger property/casualty writers. In spite of recent operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. and declines in equity portfolio market values, the company's capitalization remains exceptionally strong and is a key factor in support of the rating. In addition, American Family's profile as a regional, Midwest focused, predominately personal lines insurer, has generally insulated in·su·late tr.v. in·su·lat·ed, in·su·lat·ing, in·su·lates 1. To cause to be in a detached or isolated position. See Synonyms at isolate. 2. the company from many significant issues that have impacted more national property/casualty writers, including New Jersey automobile, toxic mold, automobile diminished value, and Sept 11th event losses. Fitch believes that American Family is well positioned to post improved operating results in the continuing competitive and challenging personal lines market environment. The commercial paper rating, which is Fitch's highest, of AFFS reflects the strength of the American Family Insurance Group, as well as the explicit guarantee of the debt by American Family Mutual Insurance Company. Entity/Issue/Type Action Rating/Outlook American Family Mutual Insurance Co. --Insurer financial strength Affirmed 'AA'/Stable. American Standard Insurance Co. of WI --Insurer financial strength Affirmed 'AA'/Stable. American Family Insurance Co. --Insurer financial strength Affirmed 'AA'/Stable. American Standard Insurance Co. of OH --Insurer financial strength Affirmed 'AA'/Stable. American Family Financial Services, Inc. --Commercial paper Affirmed 'F1+'. |
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