Fitch Ratings Affirms American Financial Group, Inc.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 -- 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 all ratings of American Financial Group, Inc. (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 ) (see list below). These ratings include AFG's 'BBB+' long-term issuer rating and the 'A+' insurer financial strength rating (IFS) of Great American Insurance Company (GAIC GAIC Great American Insurance Company GAIC German American Internee Coalition (New London, New Hampshire) GAIC Generalized Akaike Information Criterion GAIC Gallium Arsenide Integrated Circuit GAIC Gulf Asia International Company ) and members of its intercompany pool. Additionally, Fitch assigns an 'A+' IFS rating to several other property/casualty subsidiaries of AFG, including Republic Indemnity Company of America, Mid-Continent Casualty Company, and American Empire For other uses, see American Empire (disambiguation). American Empire is a term relating to the historical expansionism and the current political, economic, and cultural influence of the United States on a global scale. Surplus Lines Insurance Company, reflecting that these are core subsidiaries to AFG's specialty insurance operations. The Rating Outlook for AFG and its subsidiaries' debt is changed to Stable from Negative. The Rating Outlook for the insurer financial strength ratings of the operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. remains Stable. The ratings continue to be based on AFG's market position as a specialty property/casualty insurance organization, adequate statutory capital position, and recent favorable improvement in underwriting results and profitability. The rating also considers that GAIC has above-average credit exposure related to reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. recoverables, and profitability has been unfavorably affected by adverse loss reserve development in each of the past four consecutive years. A key driver of the change in the debt Rating Outlook was a reduction in financial leverage at the holding company level. Financial leverage at AFG remains at the high end of the current rating category but has declined recently through growth in retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and approximately $85 million of new equity issued in late 2004. The ratio of debt plus preferred securities to total capital ratio was 29.9% at year-end 2004 after adjusting for equity credit of trust-preferred securities and the impact of FAS 115. AFG's interest coverage in 2004 was approximately 5 times, excluding the impact of realized investment gains. AFG reported 10.8% growth in property/casualty net written premiums in 2004, reflecting continued favorable market conditions. The GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). underwriting combined ratio improved to 94.8% in 2004 from 98.9% in 2003. Net income improved to $359.9 million in 2004 from $289.7 million in 2003. Besides the improved underwriting performance in 2004, net earnings were boosted by a large increase in realized investment gains, driven in large part by a $134 million after-tax gain related to AFG's investment in banking organization, Provident Financial Group Provident Financial Group was a bank located in Cincinnati, Ohio. It was purchased in 2004 by National City Corporation for $2.1 billion. , which was acquired by National City Corp. in 2004. AFG is a public holding company with subsidiaries engaged primarily in the sale of property/casualty insurance, life insurance, and annuities. The company had total assets of $22.5 billion and total shareholders equity of $2.4 billion, as of Dec. 31, 2004. The companies' property/casualty insurance operations were the 39th largest in the U.S., based on 2003 net written premiums. Fitch affirms the following ratings with a Stable Rating Outlook: American Financial Group, Inc. -- Long-term issuer affirmed at 'BBB+'; -- 7.125% senior due 2009 affirmed at 'BBB+'; -- 7.125% senior due 2007 affirmed at 'BBB+'; -- Senior convertible notes due 2033 affirmed at 'BBB+'; -- Senior debentures due 2034 affirmed at 'BBB+'. American Premier Underwriters, Inc. -- Long-term issuer affirmed at 'BBB+'; -- 10.875% subordinate notes due 2011 affirmed at 'BBB'. Great American Insurance Company Intercompany Pool(1) -- Insurer financial strength (IFS) affirmed at 'A+'. Fitch assigns the following ratings with a Stable Rating Outlook: Republic Indemnity Company of America -- Insurer financial strength assigned 'A+'. American Empire Surplus Lines Insurance Company -- Insurer financial strength assigned 'A+'. Mid-Continent Casualty Company -- Insurer financial strength assigned 'A+'. (1) Members of the pool include: Great American Insurance Company, Great American Insurance Company of New York, Great American Fidelity Insurance An agreement whereby, for a designated sum of money, one party agrees to guarantee the loyalty and honesty of an agent, officer, or employee of an employer by promising to compensate the employer for losses incurred as a result of the disloyalty or dishonesty of such individuals. Company, Great American Spirit Insurance Company, Great American Security Insurance Company, Great American Protection Insurance Company, Great American Alliance Insurance Company, Great American Assurance Company, Great American E&S Insurance Company, and Worldwide Casualty Insurance Company. |
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