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A.M. Best Affirms Credit Ratings of American Financial Group, Inc. and Most of Its Insurance Subsidiaries

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A.M. Best has affirmed the Financial Strength Rating (FSR) of A+
(Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of
"aa-" of Great American Insurance Company and its pooling affiliates,
collectively referred to as Great American Insurance Companies (Great
American). Concurrently, A.M. Best has affirmed the Long-Term ICR of
"a-" and the Long-Term Issue Credit Ratings (Long-Term IR) of American
Financial Group, Inc. (AFG) (Cincinnati, OH) (NASDAQ:AFG). The
outlook of these Credit Ratings (ratings) is stable.

Concurrently, A.M. Best has upgraded the Long-Term ICRs to "a+" from "a"
and affirmed the FSR of A (Excellent) of the property/casualty (P/C)
members of the Republic and Summit Insurance Pool (collectively,
Republic and Summit). The outlook for the FSR has been revised to
positive from stable while the outlook for the Long-Term ICR remains
positive. Two pool members – Republic Indemnity Company of America and
Republic Indemnity Company of California – are headquartered in Encino,
CA. The remaining members – Bridgefield Employers Insurance Company and
Bridgefield Casualty Insurance Company (collectively, the Summit
companies) – are headquartered in Lakeland, FL.

A.M. Best also has upgraded the FSR to A+ (Superior) from A (Excellent)
and the Long-Term ICRs to "aa-" from "a+" of National Interstate
Insurance Company (headquartered in Richfield, OH) and its affiliates
(collectively referred to as National Interstate). The outlook of these
ratings is stable.

In addition, A.M. Best has affirmed the FSR of A+ (Superior) and the
Long-Term ICRs of "aa-" of the P/C members of the Mid-Continent Group
(Mid-Continent) (headquartered in Tulsa, OK). The outlook of these
ratings is stable.

At the same time, A.M. Best has affirmed the FSR of A (Excellent) and
the Long-Term ICRs of "a+" of Great American Life Insurance Company
(GALIC) and its wholly owned subsidiary, Annuity Investors Life
Insurance Company (AILIC), the key annuity subsidiaries of AFG. The
outlook of these ratings is stable.

Furthermore, A.M. Best has affirmed the FSR of B++ (Good) and the
Long-Term ICR of "bbb+" of Manhattan National Life Insurance Company
(Manhattan National) (Cincinnati, OH), a life subsidiary of AFG. The
outlook of these ratings is stable.

All companies are subsidiaries of AFG and headquartered in Cincinnati,
OH, unless otherwise specified. (Please see link below for a detailed
listing of the P/C and life and annuity companies and ratings.)

The ratings of Great American reflect its balance sheet strength, which
A.M. Best categorizes as strongest, as well as its strong operating
performance, favorable business profile and appropriate enterprise risk
management (ERM).

Great American's ratings consider the group's balance sheet strength,
which reflects its risk-adjusted capitalization being at the strongest
level, as measured by Best's Capital Adequacy Ratio (BCAR), and the
quality of its investments and reinsurance, consistently strong
operating profitability, which has been sustained over the long term,
and diversified business profile, which serves to protect its earnings
stream. Great American's strong operating performance reflects the
profitable underwriting results derived through management's disciplined
operating strategy and specialty market knowledge, as well as the
group's multiple distribution channels, diversified product offerings,
broad geographic spread of risk and access to data through its
sophisticated technology platform.

These positive rating factors are somewhat offset by elevated investment
in certain higher risk asset classes and by adverse prior-year loss
reserve development occurring in certain lines of business, particularly
relating to the run-off of its asbestos and environmental claims.

The ratings of Republic and Summit reflect its balance sheet strength,
which A.M. Best categorizes as very strong, as well as its strong
operating performance, neutral business profile and appropriate ERM. The
ratings of the members of Republic and Summit also reflect ratings lift
from the lead rating unit, Great American, based on implicit and
explicit support.

Republic and Summit's Long-Term ICR upgrades recognize the pool's
continued smooth integration of the Summit companies, as evidenced by
the group's steadily improved combined ratios and overall profitability
since the Summit companies were acquired. The positive outlooks reflect
the potential for further rating upgrades over the next 12-24 months,
should the group continue to generate overall operating performance
comparable to recent results while maintaining the strongest level of
risk-adjusted capitalization, as measured by BCAR. Republic and Summit's
ratings otherwise reflect the pool's sustained strong operating
performance on an absolute basis and relative to the results of
similarly rated peers within the workers' compensation composite, while
maintaining very strong balance sheet strength through its strongest
level of risk adjusted capitalization, favorable development of prior
years' loss reserves and a solid investment portfolio. Republic and
Summit also benefits from the expanded geographic diversification of its
business that followed the addition of the Summit companies to the pool
in 2014.

The ratings of National Interstate reflect its balance sheet strength,
which A.M. Best categorizes as strongest, as well as its strong
operating performance, neutral business profile and appropriate ERM. The
ratings also reflect lift from the lead rating unit, Great American,
based on implicit and explicit support.

National Interstate's rating upgrades reflect enhanced integration and
shared resources with the broader AFG enterprise now that National
Interstate is fully owned by AFG. The ratings otherwise reflect the
group's strong long-term operating performance; risk-adjusted
capitalization being at the strongest level, as measured by BCAR,
achieved through generally profitable underwriting results and
demonstrated expertise within its niche transportation market. In
addition, the ratings acknowledge the group's experienced management
team and conservative operating philosophy. The positive rating
attributes are derived from management's focus on maintaining rate
integrity, controlled claims handling and detailed segmentation of risks
that are supported by effective technology resources. Additionally,
National Interstate's focus on providing alternative risk transfer
programs for the specialty transportation segment provides the group
with a sustainable competitive advantage, particularly in terms of
pricing, claims adjusting and loss control.

Partially offsetting these positive rating factors are adverse
development of some recent calendar year loss reserves (although the
2014, 2015 and 2016 accident years have each developed favorably) and
the associated deterioration in underwriting results in recent calendar
years, although calendar year underwriting results have improved in each
of the past three years. National Interstate's ratings also consider its
concentration of business within the passenger and truck transportation
industries.

The ratings of Mid-Continent's reflect its balance sheet strength, which
A.M. Best categorizes as strongest, as well as its strong operating
performance, neutral business profile and appropriate ERM. The ratings
also reflect ratings lift from the lead rating unit, Great American,
recognizing the historical support provided by ultimate parent AFG to
Mid-Continent.

Mid-Continent's ratings consider its balance sheet strength, which is
supported by risk-adjusted capitalization that measures in the strongest
category, favorable investment portfolio and a high quality reinsurance
panel. The balance sheet strength has benefited from favorable operating
performance sustained over the long term and successful position within
its targeted markets. The group's favorable underwriting and operating
results reflect management's proven product knowledge and commitment to
maintaining accurate pricing.

These positive rating factors are offset partially by adverse prior year
loss reserve development in recent years arising from the product
liability line of business, which has pressured underwriting results for
the past several years. Additional offsetting factors include the
group's relatively limited geographic spread of business with the
majority of it derived from Texas, Oklahoma and Florida, which exposes
the operations to elevated degrees of regulatory, legislative and
competitive risks.

The ratings of GALIC and AILIC reflect its balance sheet strength, which
A.M. Best categorizes as strong, as well as its strong operating
performance, neutral business profile and appropriate ERM. The ratings
also reflect lift from the lead rating unit, Great American, based on
implicit and explicit support.

The life group maintains strong risk-adjusted capitalization, as
measured by BCAR, along with strong liquidity and financial flexibility.
The group also maintains a positive quality of capital with low
financial leverage and low reinsurance dependence. The investment
portfolio's exposure to real estate-related investments, particularly
residential mortgage-backed securities, remains high relative to its
peers, with additional elevated exposure to collateralized loan
obligations as a percentage of total capital. GALIC continues to
generate strong earnings with increasing net investment income, although
it lacks some premium diversification with a significant majority
derived from annuities core lines of business. Although the company has
reported net realized losses on a statutory basis over the past three
years, a substantial portion of these losses has been offset by an
increase in its common stock portfolio's unrealized gain over the same
time period.

GALIC and AILIC maintain a favorable and competitive market leading
position in major lines of annuity business with good diversification in
distribution channels and continued development of products. These
characteristics are offset by a business mix that A.M. Best has on its
product continuum at the high end of risk. Additionally, strong growth
in the annuity business over the past several years has helped GALIC and
AILIC become material contributors to AFG's consolidated revenue and
earnings.

Manhattan National's ratings reflect its balance sheet strength, which
A.M. Best categorizes as strong, as well as its marginal operating
performance, limited business profile and appropriate ERM. The ratings
also recognize the strength and support of AFG.

Manhattan National has continued to report strong risk-adjusted
capitalization, offset by its declining premium and statutory earnings
trends. A.M. Best believes that the run-off block of ordinary life
business remaining at the company is no longer central to the
organization's long-term strategy. Although the life insurance line
should continue to provide some revenue and earnings diversification for
AFG's annuity operations, the contribution has been steadily decreasing.
Net investment income continues to fluctuate due to lower invested
assets and net yields.

Each of the groups discussed above also benefits from the financial
flexibility provided by AFG, which maintains financial leverage that is
in line with its current ratings, as well as additional liquidity
sources given its access to capital markets and line of credit. A.M.
Best expects that earnings and cash flows from AFG's operating
subsidiaries will allow it to support risk-adjusted capitalization,
should the need arise. At the same time, surplus growth at each group
has been limited over the past five years by the payment of significant
stockholder dividends to AFG. These dividends vary based on capital
needs at the various subsidiaries.

AFG's debt-to-capital (excluding accumulated other comprehensive income)
and interest coverage ratios remain within A.M. Best's guidelines for
its current ratings. AFG maintains sound liquidity and access to a
revolving credit facility. AFG has no material debt maturing until 2026,
further benefiting its liquidity position. AFG relies on stockholder
dividends from its subsidiaries to fund interest expenses, repurchase
company stock, redeem debt, reallocate capital to support its operating
entities and for other corporate purposes. Nonetheless, management
remains committed to maintaining capital at the rated entities at levels
commensurate with their ratings.

For a complete list of American Financial Group, Inc.'s subsidiaries'
FSRs, Long-Term ICRs and Long-Term IRs, please visit American
Financial Group, Inc
.

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
.

A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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