The outlook for both ratings has been revised to stable from positive.
The rating actions are based on Farmers' adequate level of capitalization driven primarily by its low underwriting leverage, several years of profitable operating results and a long-standing local market presence in its single state of operation. These positive rating factors are attributed to the company's focus on profitability within in its business niche and its long-term agency relationships. Over the past several years, the company reported above average operating income as a result of its favorable underwriting results and a steady flow of investment income. Through periods of competitive market conditions, management has maintained its underwriting and pricing discipline. The ratings further reflect the expectation that Farmers will continue to strengthen its risk- adjusted capitalization and out-perform the operating results of the composite average.
As a property predominant writer with a geographic concentration in
However, these factors are partially mitigated by Farmers' five- year average pure loss ratio that outperforms the composite.
Factors that could trigger negative rating actions include excessive premium growth or significant deterioration in Farmers' operating performance that may cause a material decline in its risk- adjusted capitalization.
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