Fitch Publishes Unrated Issuer Report on American Financial Group, Inc.
In addition to highlighting what Fitch considers to be AFG's main credit issues and trends, the report takes a closer look at:
--Franchise and market position;
--Profitability and debt servicing capabilities.
AFG's property and casualty (P/C) business has a distinct franchise as a top 15 commercial lines underwriter. AFG has demonstrated an ability to protect its specialty P/C market niches through strong distribution relationships. Fitch views AFG's annuity segment as possessing a less attractive credit profile than the P/C segment due to its relatively small scale and more tenuous distribution relationships verses larger and more diversified peers. Also the inherent interest rate risk of annuity operations creates uncertainty tied to business retention and earnings stability.
AFG has historically reported consistent underwriting profits with little catastrophe impact, but the combined ratio slipped to an average of 95.6% for 2012 - 2014 from 88.1% in 2009 - 2011. Overall operating ROEs and coverage are now improving, driven by rebounding P/C underwriting performance since the low point in 2012 and the steadily growing contribution from the annuity segment. Fitch also expects net investment income in the P/C segment to continue modest improvement with steady investment yields and modest invested assets growth.
A peer analysis and a summary of market-based indicators round out the UIR.
UIRs are not solicited by the issuer, and Fitch receives no compensation from the issuer for the provision of an UIR. While a UIR is typically based primarily on public information, Fitch analysts may ask questions of an issuer's management while preparing the report. The level of management participation, if any, can vary significantly from case to case.
Комментарии