American Financial Group, Inc. (AFG Quick QuoteAFG - Free Report) recently announced that its 3.5% $300 million 10-year senior unsecured notes received rating from credit giant A.M. Best. The credit rating agency assigned an issue rating of “a-” to these unsecured notes with a stable outlook.

Nonetheless, its issuer credit rating of “a-“, the existing issue ratings and the ratings of the operating insurance subsidiaries of American Financial remain unchanged.

The property and casualty (P&C) insurer intends to utilize the net proceeds to finance a part of the purchase price to acquire all the shares of National Interstate Corporation (NATL Quick QuoteNATL - Free Report) .

American Financial anticipates the merger between National Interstate and its wholly-owned subsidiary Great American Insurance to be completed by the fourth quarter of 2016. In case the transaction does not consummate, the net proceeds will be deployed for general corporate purposes, including share buybacks.

American Financial is likely to witness a moderate increase in financial leverage in the future but it will still remain within the rating giant’s guidelines to back the current ratings.

Rating affirmations or upgrades from credit rating agencies play an important role in retaining investors’ confidence in the stock as well as maintaining credit worthiness in the market. Hence, it is expected that such ratings will help the company write more business in the future.

Zacks Rank and Stocks to Consider

Currently, American Financial holds a Zacks Rank #2 (Buy). Some better-ranked stocks include Allied World Assurance Company Holdings, AG (AWH Quick QuoteAWH - Free Report) , Argo Group International Holdings, Ltd. and National Interstate Corporation (NATL Quick QuoteNATL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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