MOODY'S DOWNGRADES SUBORDINATED DEBT RATING OF AMERICAN PREMIER UNDERWRITERS TO Ba3; UPGRADES SENIOR DEBT RATING OF AMERICAN ANNUITY GROUP TO Ba2; ASSIGNS Ba3 SENIOR DEBT RATING TO AMERICAN FINANCIAL CORPORATION AND Baa3 INSURANCE FINANCIAL STRENGTH RATIN
New York, 05-02-95 -- Moody's Investors Service downgraded the rating on the subordinated debt of American Premier Underwriters, Inc. to Ba3 from Baa3, while also downgrading the insurance financial strength ratings of two of its property & casualty subsidiaries. Moody's upgraded the rating on the senior debt of American Annuity Group, Inc. to Ba2 from Ba3, while confirming the Baa3 insurance financial strength rating of its principal subsidiary, Great American Life Insurance Company. At the same time, Moody's assigned a Ba3 rating to the senior debt of American Financial Corporation, and a Baa3 rating for insurance financial strength to its largest property & casualty subsidiary, Great American Insurance Company.
According to Moody's, these rating actions are based on the recent merger in which American Premier Underwriters, Inc. and American Financial Corporation became wholly owned subsidiaries of a new holding company called American Premier Group, Inc. American Financial Corporation previously owned about 45% of American Premier Underwriters, Inc., and it continues to own indirectly 80% of American Annuity Group, Inc. The combined entity has announced plans to use its cash to retire at least $500 million of external debt. The new group will have consolidated financial leverage considerably higher than that of American Premier Underwriters, Inc. on a stand-alone basis, and lower than that of American Financial Corporation on a stand-alone basis. According to Moody's, the revised ratings reflect the strong market position and earnings power of the combined property & casualty insurance operations, as well as the improved financial flexibility of the life insurance & annuity operations. These strengths are offset by the organization's continuing high financial leverage and by its complexity.
The following ratings were lowered:
American Premier Underwriters, Inc. -- subordinated debt to Ba3 from Baa3;
Atlanta Casualty Company -- insurance financial strength to Baa3 from Baa1;
Republic Indemnity Company of America -- insurance financial strength to Baa3 from Baa1.
The following ratings were raised:
American Annuity Group, Inc. -- senior debt to Ba2 from Ba3, and subordinated debt to Ba3 from B2.
The following rating has been confirmed:
Great American Life Insurance Company -- insurance financial strength at Baa3.
The following ratings have been assigned:
American Financial Corporation -- Ba3 for senior debt;
Great American Insurance Company -- Baa3 for insurance financial strength.
American Premier Group, Inc., based in Cincinnati, Ohio, is a holding company with subsidiaries engaged in multiple property & casualty insurance businesses, and in the tax-deferred annuity business. The group, which is controlled by the Lindner family, also holds a 38% interest in Citicasters Inc. and a 45% interest in Chiquita Brands International, Inc. American Premier Group, Inc. reported pro forma consolidated GAAP assets of $13 billion and pro forma consolidated shareholders' equity of $822 million as of December 31, 1994.
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