A.M. Best Affirms Ratings of the Members of Farmers Insurance Group [Professional Services Close – Up]

Proquest LLC

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 Exchange Capital.

In addition, A.M. Best has affirmed the ICR of "bbb" and the debt rating of "bbb" on USD 100 million 5.9 percent 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 (Zurich) (Switzerland).