What is the expected effect on SFG's underwriting profitability and combined ratio moving forward?

Fundamentals

The AM Best reaffirmation of an A+ Financial Strength Rating and “aa‑” Long‑Term Issuer Credit Ratings for Sammons Financial Group (SFG) and its two main subsidiaries signals that the market still views the company’s balance sheet and capital‑management framework as solid. An A+ rating keeps SFG’s cost of reinsurance and borrowing relatively low, which in turn lets the underwriting units price risk more competitively without eroding margin. Because the rating is unchanged—not upgraded or downgraded—the underwriting teams can continue the disciplined “profit‑first” approach that has historically kept the loss‑ratio and expense‑ratio in check. Expect the combined ratio (loss + expense) to hold steady or modestly compress as the firm leverages its strong credit standing to negotiate better reinsurance terms and to retain high‑quality, lower‑volatility business.

Market & Technical View

The reaffirmation removes a near‑term credit‑risk catalyst, so any pricing discount that built in anticipation of a downgrade should evaporate. In the past 3 months SFG’s stock has been trading in a tight 5‑day range around $30‑$32, with the 20‑day moving average acting as support near $30. A breakout above the $32 resistance line—especially on volume—could signal the market’s acceptance that underwriting profitability will stay intact and the combined ratio will not deteriorate. Conversely, a breach below $30 would likely be a buying opportunity, as the credit‑rating news eliminates a downside risk and the price would be oversold relative to the fundamentals.

Actionable Insight

• Short‑term: Look for a pull‑back to the $30‑$31 support zone; a bounce from there would be a buy on the expectation that underwriting profitability remains stable and the combined ratio will either hold or compress modestly.
  
• Medium‑term: Monitor quarterly earnings releases for the loss‑ratio and expense‑ratio trends. If the combined ratio narrows (e.g., moves from ~95% to the low‑90s), it validates the credit‑rating impact and could justify a position‑sizing upgrade or a stop‑loss just below the recent low (≈$28).
  

Overall, the AM Best reaffirmation should support SFG’s underwriting profitability and keep the combined ratio on a flat‑to‑improving trajectory, removing a credit‑risk drag and creating a relatively bullish backdrop for the stock.