A.M. Best has affirmed the financial strength rating of B+ (Good)
and the issuer credit rating of “bbb-” of American Federated Life
Insurance Company (AFLIC) (Flowood, MS). The outlook for both
ratings is stable.
AFLIC is a wholly owned subsidiary of First Tower LLC (First Tower), a
multiline specialty finance company. The ultimate parent is Prospect
Capital Corporation [NASDAQ: PSEC], a publicly-traded closed-end
investment company, which acquired an 80.1% majority interest in First
Tower Corp (AFLIC’s former parent) and its subsidiaries in June 2012.
The ratings reflect AFLIC’s adequate risk-adjusted capitalization, its
continued profitable operating results and high quality investment
portfolio. AFLIC provides credit life and credit accident and health
insurance coverage for individuals that have personal loans originated
by the consumer finance subsidiaries of First Tower.
AFLIC’s product and geographic concentration expose it to regulatory and
legislative risks. The company recently expanded into Alabama and
Illinois, giving it distribution capabilities in five states. Despite
the still generally weak economy, the outlook reflects A.M. Best’s
expectations that favorable earnings will continue to support operations
while maintaining an adequate level of risk-adjusted capitalization over
the near to medium term.
A.M. Best believes positive rating movement is unlikely in the
foreseeable future. AFLIC’s ratings may face downward pressure if
operating results deteriorate or it experiences a significant decline in
capitalization due to losses or dividends to its parent.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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