Debt Ratings Assigned for American Financial Group

A.M. Best Co. assigned initial debt ratings to the existing debt of Cincinnati-Ohio-based American Financial Group Inc. Included is the assignment of a “bbb” to American Financial Group Inc.’s senior debentures and the extension of indicative ratings of “bbb” senior debt, “bbb-” subordinated debt, and “bbb-” trust preferred to American Financial Group’s existing $340 million shelf registration.

In addition, A.M. Best affirmed the Excellent financial strength ratings for
the majority of the property/casualty and life/health subsidiaries of AFG. A.M. Best also raised the financial strength ratings for the remaining property/casualty subsidiaries. The rating actions reflect AFG’s strong capitalization and historically favorable operating earnings. Capitalization is driven by AFG’s generally sound loss-reserving practices, moderate underwriting leverage and quality investment portfolio, which is partially offset by equity investments in affiliate entities ? that typically are viewed as less liquid.

Although 2001 earnings were adversely affected by losses related to Sept.
11, the strengthening of asbestos and environmental reserves, unrealized losses and the write down of impaired assets, operating earnings have been favorable over the past five years, driven by the life and annuity segment. These results are reflective of management’s disciplined operating style, product knowledge, strong technology platform, multiple distribution channels and diversified product offerings.

Moreover, AFG benefits from a consistent and stable management team with
extensive insurance experience and resources. The ratings also consider AFG’s favorable market presence as one of the top 25 domestic property/casualty groups.

In a separate rating action, A.M. Best has raised the rating of some auto subsidiaries and created a new group, Specialty Auto Group, which has been assigned an “A” (Excellent) financial strength rating.

Topics AM Best Property Casualty