A.M. Best has removed from under review with negative
implications and downgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to “c” from “b-” of Atlas Financial Holdings, Inc.
(Atlas) [NASDAQ: AFH], the Financial Strength Rating (FSR) to C (Weak)
from B (Fair) and the Long-Term ICRs to “ccc” from “bb” of American
Service Insurance Company Inc. (Schaumburg, IL), American Country
Insurance Company (Elk Grove Village, IL) and Gateway Insurance
Company (St. Louis, MO), collectively referred to as the American
Service Pool. A.M. Best also has removed from under review with
negative implications and downgraded the FSR to C++ (Marginal) from B+
(Good) and the Long-Term ICR to “b” from “bbb-” of Global Liberty
Insurance Company of New York (Global Liberty) (Melville, NY),
another wholly owned subsidiary of Atlas. The outlook assigned to these
Credit Ratings (ratings) is negative.
The ratings of American Service Pool reflect its balance sheet strength,
which A.M. Best categorizes as very weak, as well as its marginal
operating performance, neutral business profile and marginal enterprise
risk management (ERM).
The ratings of Global Liberty reflect its balance sheet strength, which
A.M. Best categorizes as adequate, as well as its marginal operating
performance, limited business profile and marginal ERM. The ratings also
consider significant drag from the lead rating unit, American Service
The rating downgrades reflect the significant reserve strengthening
charge taken in the fourth quarter of 2017, primarily due to
Michigan-related claims and non-New York Global Liberty business written
prior to 2016. This reserve strengthening caused significant operating
losses at both companies, year-over-year decreases in policyholder
surplus of 35% at American Service Pool and a 27% at Global Liberty, as
well as significantly reduced risk-adjusted capitalization levels that
no longer support the current ratings. American Service Pool has
increased its quota share reinsurance cession effective April 1, 2018,
to mitigate operating leverage on a going-forward basis.
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.
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