Great American Insurance Now Solely a Specialty Lines Carrier
Early this year, American Financial Group, Inc. (AFG), our parent company, announced that it had reached an agreement to sell our Annuity business to MassMutual. The sale closed on May 28, marking a significant change to AFG’s business. Although AFG had long believed there was compelling value in operating both a Specialty P&C business and a market-leading fixed and indexed annuity business, the financial markets had not fully recognized the value of our market-leading annuity business. In MassMutual, AFG identified a buyer committed to establishing a subsidiary in Cincinnati, ensuring that the sale would have no impact on relationships with and commitments to its annuity policyholders and distribution channels. Importantly, we are very pleased that AFG’s annuity employees continue to have compelling career opportunities in an annuity business that remains a part of the Greater Cincinnati community.
This transaction simplifies AFG’s business model by creating a stand-alone specialty commercial Property and Casualty company that highlights AFG’s long-standing top performance as a specialty P&C underwriter, with expertise in over 30 commercial insurance lines, including Ocean Marine. The news was well-received by the rating agencies, who affirmed our financial strength.
Currently, Great American Insurance Company is rated A+ by S&P, A1 by Moody’s and “A+” (Superior) by A.M. Best. Great American Insurance Company is one of only four companies rated “A” (Excellent) or better by A.M. Best for more than 110 years. Analysts across the rating agencies point to several key factors supporting our high ratings. Great American is a specialty lines carrier with proven experience and a strong market position in many niche markets. In addition, the company’s strength is supported by our diversified book of business. Great American consistently produces solid underwriting results, maintaining lower volatility of underwriting income relative to our peers. We also maintain a low catastrophe risk profile. We are proud that our P&C businesses had resilient results in 2020 despite pressures from catastrophes and COVID-19.
Finally, the sale bolstered our already strong capital position. Our excess capital remains at a significant level, which affords us the financial flexibility to grow our specialty P&C niche businesses organically and through acquisitions and start-ups that meet our target return thresholds, as well as share repurchases and special dividends.