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American Financial's (AFG) Senior Notes Rated by A.M. Best

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American Financial Group, Inc.’s (AFG - Free Report) recently issued senior unsecured notes received ratings affirmations from A.M. Best. The credit rating giant assigned Long-Term Issue Credit Rating (Long-Term IR) of “a-” to 4.5% $350 million senior unsecured notes. The notes are scheduled to mature in 2047. The outlook for the ratings was stable.

The ratings of American Financial’s operating insurance subsidiaries remained unchanged.

Though the rating giant does not expect the leverage to change materially, it anticipates interest coverage to improve as interest expense on newly issued notes will decline. The rating agency expects the metrics to remain within A.M. Best’s guidelines for the current ratings.

Last week, American Financial announced the offering of 4.50% $350 million senior notes, dated Jun 15, 2047. The company has priced the notes at 99.46% of their principal amount. The company intends to deploy a portion of this offering to redeem $230 million 6.375% senior notes, due Jun 2042.The remainder will be used to redeem all or a portion of 5.75% $125 million senior notes, due Aug 2042.

Moody’s Investor Service – an affiliate of Moody’s Corporation (MCO - Free Report) – has assigned Baa1 rating with stable outlook to these senior notes.

Shares of American Financial gained 3.77% quarter to date, significantly outperforming the Zacks categorized Property and Casualty insurance industry’s increase of 0.26%. We believe that the company’s solid operational performance, strategic initiatives as well as robust capital and liquidity position will continue to drive the stock higher in the near future.


Strong ratings from credit rating agencies play an important part in retaining investor confidence on the stock as well as maintaining credit worthiness in the market. Therefore, rating downgrades adversely affect the business as well as increase the costs of future debt issuances. We believe that strong ratings will help American Financial retain investor confidence and help it write more businesses going forward.

Other Stocks to Consider

Investor interested in the property & casualty (P&C) industry can look at First American Financial Corporation (FAF - Free Report) and ProAssurance Corporation (PRA - Free Report) .
    
First American Financial delivered positive surprises in the last four quarters with an average beat of 14.12%. The company flaunts Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ProAssurance operates as a holding company for many property and casualty insurance companies. The company delivered positive surprises in the last four quarters with an average beat of 16.59%. The company carries Zacks Rank #2.

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