AM Best Revises Credit Ratings for American Southern Group
AM Best has revised the credit ratings for members of the American Southern Group. The Financial Strength Rating (FSR) has been lowered to A- (Excellent) from A (Excellent), along with a downgrade of Long-Term Issuer Credit Ratings (ICRs) to "a-" (Excellent) from "a" (Excellent). This affects American Southern Insurance Company and its wholly owned subsidiary, American Safety Insurance Company. However, the Long-Term ICR of Atlantic American Corporation, the parent company listed on NASDAQ [AAME], remains at "bbb-" (Good) with a negative outlook on these ratings. Similarly, AM Best confirmed the FSR of A- (Excellent) and the Long-Term ICRs of "a-" (Excellent) for the Bankers Fidelity Life Insurance Group, maintaining a stable outlook.
The downgrading of American Southern Group’s ratings is attributed to a diminished assessment of their balance sheet, now regarded as strong rather than very strong, due to a decline in risk-adjusted capitalization. This change is evidenced by the group's Best Capital Adequacy Ratio (BCAR) and challenges with capital modeling and stress-testing related to its evolving risk profile. The deterioration stems from pressures in their commercial auto liability segment, prompting the need for further reserve strengthening by 2026. The group's risk-adjusted capitalization and enterprise risk management face additional pressures due to these factors and an increasing concentration in their largest account without extensive reinsurance protections.
In contrast, AM Best evaluates the Bankers Fidelity Life Insurance Group's balance sheet as very strong, underlined by robust risk-adjusted capitalization, as measured by BCAR. Despite variability in annual net income, the group has seen improved operating performance driven by rate increases and optimized Medicare supplement underwriting. Their strategy involves expanding diversified health and life insurance products, enhancing business stability. The group’s business diversification strategy is evidenced by these developments in ancillary health and life sectors.
Atlantic American Corporation filed with the SEC for additional time to finalize its 2025 Form 10-K, specifying that this delay pertains to the adoption of ASU 2018-12 and did not foresee major operational changes compared to the previous year.
AM Best is a global entity in the insurance sector, providing credit ratings, publications, and data analytics, operating across the Americas, Europe, the Middle East, and Asia-Pacific. Further information on this release and details regarding the use and limitations of these ratings can be accessed on the AM Best website.