A.M. Best Affirms Ratings of American Federated Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--

A.M. Best has affirmed the financial strength rating of B (Fair) and the issuer credit rating of "bb" of American Federated Insurance Company (AFIC) (Flowood, MS). The outlook for each rating is negative.

AFIC is an indirect, wholly owned subsidiary of First Tower Finance Company LLC (First Tower Finance), a multi-line specialty finance company. Prospect Capital Corporation PSEC, a publicly traded closed-end investment company, indirectly owns an 80.1% majority interest in First Tower Finance and its subsidiaries.

The ratings reflect considerable financial leverage that has resulted in a deficit in members' equity at First Tower Finance, stemming from a 2014 transaction involving the return of First Tower Finance's capital to its members. The outlooks reflect the significant financial leverage at First Tower Finance, an intermediate holding company, and the potential for this to create pressure on AFIC for dividends or increased expense sharing.

Negative rating actions could occur if the financial condition of First Tower Finance weakens significantly. In addition, negative rating actions could occur should Prospect Capital Corporation fail to provide adequate support for First Tower Finance and its subsidiaries.

This press release relates to rating(s) 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.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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