OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has affirmed the financial strength ratings (FSR)
of A (Excellent) and issuer credit ratings (ICR) of “a” of the members
of the Farmers Insurance Group (Farmers) and Farmers
Reinsurance Company. Concurrently, A.M. Best has affirmed the ICR of
“a” of Farmers’ management company and attorney-in-fact, Farmers
Group Inc. (FGI) as well as the debt ratings on the outstanding
surplus notes of Farmers Insurance Exchange and Farmers
In addition, A.M. Best has affirmed the ICR of “bbb” and the debt rating
of “bbb” on USD 100 million 5.9% senior notes, due 2013 of the FGI
subsidiary, 21st Century Insurance Group (Wilmington, DE). The
outlook for all ratings is stable. All companies are domiciled in Los
Angeles, CA, unless otherwise specified. (See link below for a detailed
listing of the companies and ratings.)
The ratings reflect Farmers’ market leadership position, prudent risk
management efforts, strong risk-adjusted capitalization and solid
historical operating performance. In addition, strategic acquisitions
have improved Farmers’ product and geographic diversification, as well
as created a multi channel distribution system with captive agents,
independent agents and direct-to-consumer sales.
Partially offsetting these strengths is Farmers’ variable operating
performance due to catastrophe exposure, as demonstrated in 2011 due to
a frequency of weather related events. However, Farmers has taken
considerable measures to enhance its underwriting performance through
targeted pricing actions and risk mitigation strategies, strengthened
underwriting controls and increased utilization of segmentation.
In addition, the ratings reflect its strategic importance to Zurich
Insurance Group, Ltd. (Zurich) (Switzerland). Farmers’ is the
third-largest personal lines insurer in the United States, with a
particularly strong market position in the western and southwestern
United States. Although Zurich has no ownership interest in the Farmers
Insurance Exchange, both entities are strategically linked via a
management relationship between the Exchange and FGI (need full name),
Zurich’s wholly owned subsidiary. This linkage provides Zurich with a
source of consistent fee income. Given the structural relationship
between Zurich and the Exchange, A.M. Best deviated from its “Rating
Members of Insurance Groups” criteria by providing Farmers with rating
enhancement from Zurich. As prescribed by the criteria, to be eligible
for rating enhancement, an individual company must operate under common
ownership, with the entity providing lift or maintaining board control
together with common management. In this case, while there is common
management, the boards of FGI and the Exchange are independent.
For a complete listing of Farmers Insurance Group and its members’ FSRs,
ICRs and debt ratings, please visit www.ambest.com/press/071202farmers.pdf.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: “Risk
Management and the Rating Process for Insurance Companies”; “Ratings
Members of Insurance Groups”; and “Understanding BCAR for
Property/Casualty Insurers.” Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.Raymond Thomson, ARM,908-439-2200,
ext. 5621Senior Financial Analystraymond.firstname.lastname@example.orgJeffrey
Mango, CPA,908-439-2200, ext. 5204Vice Presidentjeffrey.email@example.comRachelle
Morrow, 908-439-2200, ext. 5378Senior Manager, Public
Peavy, 908-439-2200, ext. 5644Assistant Vice President,
Source: A.M. Best Co.