A.M. Best Affirms Ratings of Agrinational Insurance Company and Assigns Ratings to ADM Insurance Company

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: ADM].

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.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. BestJanet Hernandez, 908-439-2200, ext. 5767
Senior Financial Analyst
janet.hernandez@ambest.com
orSteven Chirico, CPA, 908-439-2200, ext. 5087
Assistant Vice President
steven.chirico@ambest.com
orRachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
orJim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Company