A.M. Best reiterated the issuer credit ratings (ICR) of ‘bbb-’ and debt ratings of AmTrust Financial Services, Inc. AFSI. Concurrently, the rating agency reiterated the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a” for the property/casualty subsidiaries of AmTrust Financial. The outlook remains stable.
At the same time, A.M. Best has withdrawn the ratings of AmTrust Lloyd’s Insurance Company of Texas as it has long been lying dormant with its meager and unattractive business profile.
The rating affirmations were backed by sustained solid underwriting and operating performance in its niche market segments, a strong balance sheet and the support lent by its parent company. Moreover, the company has been successful in growing through acquisitions and renewal rights’ offerings that have in turn also led to expense savings.
However, the increase in liabilities due to higher premiums and integration risks overshadow the positives. Though the improvement in workers’ compensation line of business concern the rating agency, yet its focus on target niche classes offer a respite.
The agency might consider a rating upgrade if the company continues to outperform its peers, maintain solid risk-adjusted capitalization and keep its balance sheet strength intact. Nonetheless, the ratings might be subject to a downgrade if the operating results or loss reserve position deteriorates or risk adjusted capitalization erodes.
AmTrust Financial presently carries a Zacks Rank #3 (Hold). Some better-ranked property and casualty insurers are Endurance Specialty Holdings Ltd. ENH, Markel Corp. MKL and State Auto Financial Corp. STFC. All these sport a Zacks Rank #1 (Strong Buy).
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