S&P: Bridgefield on positive watch

Standard & Poor's said it affirmed the BBB+ rating on American Financial Group Inc. and the A+ issuer credit and financial strength ratings on the company's core insurance subsidiaries.

The outlook is stable.

The agency also said it affirmed the A- issuer credit and financial strength ratings on Bridgefield Casualty Insurance Co. and Bridgefield Employers Insurance Co. and placed them on CreditWatch with positive implications.

The positive watch follows news that American Financial signed a definitive agreement to purchase Summit Holdings and its related companies for about $250 million, which is $45 million above Summit Holding's tangible book value, S&P said.

American Financial will finance the transaction with internal sources, including cash at the holding company. The company expects the sale to close in the first quarter, or early in the second quarter, of 2014, the agency said.

The ratings reflect a view that American Financial will prudently operate Summit after the sale, said Siddhartha Ghosh, an S&P analyst.

"We believe, however, that the acquisition will increase [American Financial's] financial risk profile due to its much larger market share in workers' compensation, a highly competitive market in the United States with a poor historical track record of underwriting profitability," Ghosh said in a press release.

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