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A.M. Best Removes From Under Review With Negative Implications, Affirms Credit Ratings of American Fidelity Life Insurance Company
[April 11, 2018]

A.M. Best Removes From Under Review With Negative Implications, Affirms Credit Ratings of American Fidelity Life Insurance Company

A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb" of American Fidelity Life Insurance Company (AMFI) (Pensacola, FL). The outlook assigned to these Credit Ratings (ratings) is negative.

The ratings of AMFI were placed under review on Oct. 13, 2017, in conjunction with the release of the updated Best's Credit Rating Methodology (BCRM). The ratings have been removed from under review as A.M. Best has completed its analysis of AMFI under the updated BCRM.

The ratings reflect AMFI's balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management. The balance sheet strength is supported by its risk-adjusted capitalization being at the strongest level and favorable liquidity profile. However, AMFI's investment portfolio is viewed as higher risk due to a material shift of the credit profile in recent years, as well as the concentration risks relating to allocation of the bond portfolio in the financial sector and the limited geographic diversification of the real estate and mortgage assets. Furthermore, A.M. Best notes there is moderate financial leverage and relatively weak interest coverage metrics at its parent holding company, AMFI Corporation.

The operating performance is viewed as adequate due to the company's consistently positive earnings. However, A.M. Best notes that AMFI has reported a long-term decline in premiums and its profitability metrics are viewed as low. The company's busness profile is viewed as limited due to the long-term declines in policy counts, insurance inforce and assets. Additionally, the majority of the reserves are related to legacy deposit-type contracts with higher guaranteed minimum credit rates elevating the risk of spread compression. The company has made some progress in developing a risk management framework; however, the current framework is under-developed relative to A.M. Best's expectations due to the lack of comprehensive risk identification, quantification and adequate controls. Additionally, A.M. Best views AMFI's risk profile as high due to the notable concentrations of the business profile and investment portfolio.

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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