Moody's keeps American Financial view positive

Moody's Investors Service said it maintained the positive outlook on the Baa3 senior debt ratings of American Financial Group, Inc. and its 81% owned subsidiary, Great American Financial Resources, Inc., following American Financial's announcement that it will tender for all the outstanding shares of Great American at $23.50 a share for about $215 million.

The agency said it views the acquisition of the minority shareholders in Great American as a credit positive to both American Financial and Great American. The acquisition will simplify the group's organizational structure, incrementally improve the long-term financial flexibility of American Financial and be accretive to earnings. For Great American, the acquisition will solidify the relationship with its parent.

The positive outlook at American Financial reflects improving trends in both capital adequacy and financial leverage coupled with stronger operating earnings and improved dividend capacity coverage of interest and dividends, the agency said. Over the past several years, American Financial has taken steps to reduce its financial leverage and intends to operate with a lower leverage profile going forward.

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