A.M. Best Affirms Credit Ratings of American Federated Insurance Company
June 28 2018 - 3:43PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating of B
(Fair) and the Long-Term Issuer Credit Rating of “bb” of
American Federated Insurance Company (AFIC) (Flowood, MS).
The outlook of these Credit Ratings (ratings) remains negative.
The ratings reflect AFIC’s balance sheet strength, which A.M.
Best categorizes as weak, as well as its strong operating
performance, limited business profile and marginal enterprise risk
management.
AFIC is an indirect, wholly owned subsidiary of First Tower
Finance Company LLC (First Tower Finance), a multi-line specialty
finance company. Prospect Capital Corporation [NASDAQ:
PSEC], a publicly traded closed-end investment company, indirectly
owns an 80.1% majority interest in First Tower Finance and its
subsidiaries.
The weak balance sheet strength assessment is reflective of the
considerable financial leverage with a deficit in members’ equity
at First Tower Finance, stemming from a 2014 transaction involving
the return of First Tower Finance’s capital to its members. The
outlooks reflect the significant financial leverage at First Tower
Finance, an intermediate holding company, and the potential for
this to create pressure on AFIC for additional dividends or
increased expense sharing.
Negative rating actions could occur if the financial condition
of First Tower Finance weakens significantly. In addition, negative
rating actions could occur should Prospect Capital Corporation fail
to provide adequate support for First Tower Finance and its
subsidiaries.
This press release relates to Credit Ratings that have been
published on A.M. 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 A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20180628006340/en/
A.M. BestRobert Valenta, +1 908 439 2200, ext.
5291Senior Financial
Analystrobert.valenta@ambest.comorRaymond Thomson,
CPCU, ARe, ARM+1 908 439 2200, ext. 5621Associate
Directorraymond.thomson@ambest.comorChristopher
Sharkey, +1 908 439 2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim
Peavy, +1 908 439 2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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