OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A- (Excellent) and issuer credit rating (ICR) of “a-” of Agrinational
Insurance Company(Agrinational) (Burlington, VT). The outlook for
both ratings is stable.
A.M. Best also has assigned an FSR of A- (Excellent) and ICR of “a-” to ADM
Insurance Company (ADMIC) (Phoenix, AZ). The outlook assigned to
both ratings is stable.
The ratings for Agrinational are based on its excellent capitalization
level, overall favorable operating performance and its strategic role as
a captive insurer of Archer Daniels Midland Company (ADM) [NYSE:
Partially offsetting these favorable rating factors is the high net
retention on Agrinational’s property exposures, which has produced some
variability in operating results. Also, as a single parent captive,
Agrinational is exposed to concentration risk since its primary source
of business is from one company. Additionally, Agrinational provides
insurance for a limited amount of quasi third party business sourced
through an industry pooling arrangement.
As a means of diversifying its investment portfolio, Agrinational has
invested in the leasing of railcars and barges that are production
assets of ADM. Management considers these investments as long term and a
better alignment of the company’s capital structure while providing
stability in cash flows and investment returns.
In 2010, Agrinational purchased 100% of Advanta Corporation’s stock, a
dormant insurance shell. In 2011, the newly acquired company’s name was
changed to ADM Insurance Company and it began writing multiple peril
crop insurance and crop/hail named peril crop insurance.
As Agrinational’s wholly-owned subsidiary, ADMIC is rated with
Agrinational due to its role and strategic importance to its ultimate
parent, as demonstrated by the inter-company reinsurance arrangement
between the affiliated members.
A.M. Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated in the United States
and throughout the world.
For current Best’s Credit Ratings and independent data on the captive
and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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: “Alternative Risk Transfer (ART)”; “Risk Management
and the Rating Process for Insurance Companies”; “Understanding BCAR for
Property/Casualty Insurers”; “Evaluating Non-Insurance Ultimate
Parents”; and “Rating Members of Insurance Groups.” 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.
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Source: A.M. Best Company