AFG and Subs Affirmed
Fitch Ratings affirmed the "BBB+" long-term issuer ratings of American Financial Group Inc. (AFG) and its subsidiaries American Premier Underwriters Inc. and Great American Financial Resources Inc. (GAFR). The affirmation affects $815 million worth of specific debt issuance by the companies. Additionally, Fitch Ratings affirmed the insurer financial strength ratings of AFG's property/casualty subsidiaries and life insurance subsidiaries at "A+." Fitch also affirmed GAFR's trust originated preferred securities at "BBB." The rating outlook for all ratings is stable.
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 $19.9 billion and total shareholders equity of $1.8 billion, as of Sept. 30, 2003.
During 2003, AFG successfully sold its personal lines property/casualty business in two separate public offerings to focus on its specialty commercial lines business. The life operations occupy a good niche in the qualified annuity market, which is typified by profitable and persistent business. The organization remains challenged to reduce financial leverage and improve expense efficiency.
AFG's specialty lines operations have historically generated favorable underwriting results. The specialty business lines are diverse and consist of more than 20 different independently managed business units that can be grouped into the following nine categories: California workers' compensation, inland and ocean marine, agricultural, surety and credit, collateral protection, umbrella and excess liability, commercial automobile, excess and surplus, and executive and professional liability. Overall, operating performance at AFG continues to show improvement, returning to profitability in 2002 and 2003. However, AFG's results in 2003 include only a portion of the property/casualty personal lines operations, now a part of Infinity Property Casualty Corporation, through the equity accounting method.
Lloyd's Syndicate 2001 Assigned
A.M. Best Co. assigned a Best's Syndicate Rating of "A" (excellent) to Lloyd's Syndicate 2001, which is managed by Amlin Underwriting Ltd. The outlook is stable. The rating reflects the syndicate's excellent profile and prospective financial performance, in addition to the financial strength of the Lloyd's market, currently rated "A-" (excellent), which underpins the security of all Lloyd's syndicates.
Syndicate 2001 operates as a composite syndicate and writes a well-diversified account by class of business and territory with a U.S. and U.K. emphasis. It is a market leader for most of the classes it writes, which include property, aviation, marine, commercial motor and casualty.
Gross premium income has grown by 82 percent since 2001 to a projected $1.66 billion in 2003, driven by rate increases and increased premium volume. Best expects excellent profits when the 2002 and 2003 years of account are closed. A profit of 1 percent on capacity is projected for 2001, which Best regards as a strong performance considering this underwriting year was significantly affected by World Trade Center losses. The syndicate has consistently performed above the Lloyd's market average since its formation in 1997, with projected results for 2001-2003 likely to be in Lloyd's upper quartile.
