A.M. Best Co. has affirmed the financial strength rating of A-
(Excellent) and issuer credit rating of “a-”of
Agrinational Insurance Company (Agrinational) (Burlington,
VT). The outlook for both ratings is stable.
The ratings reflect Agrinational’s strong
capitalization, overall favorable operating performance and strategic
role as a captive insurer of Archer Daniels Midland Company (ADM)
(NYSE:ADM). Net written premium and policyholder surplus each have
exhibited significant growth over the last five years due primarily to
the growth of ADM.
Partially offsetting these favorable rating factors is the high net
retention on 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. It also provides insurance for a limited amount of
third-party business sourced through an industry pooling arrangement.
Agrinational raised rates in 2002 and 2003 in an effort to improve
operating results and enhance capitalization, which is evident in the
company’s results over the past three years.
Capital strength was increased significantly during 2005 as a result of
Agrinational assuming ownership of another ADM captive, which is now in
run off, but brought with it substantial net assets.
As a means of diversifying its investment portfolio, Agrinational has
invested in the leasing of railcars and also is planning on leasing
barges in 2008. Management considers these investments as long term and
a better alignment of Agrinational’s capital
structure, while providing stability in investment returns.
A.M. Best remains the leading rating agency of captive insurers rating a
wide variety of more than 200 captives in the United States and
throughout the world.
For current Best’s Ratings and independent
data on the captive and alternative insurance market, please visit www.ambest.com/captive.
Founded in 1899, A.M. Best Company is a global full-service credit
rating organization dedicated to serving the financial and health care
service industries, including insurance companies, banks, hospitals and
health care system providers. For more information, visit www.ambest.com.
A.M. Best Co.
Analysts:
Gale Guerra,
908-439-2200, ext. 5069
gale.guerra@ambest.com
Steve
Chirico, 908-439-2200, ext. 5097
steven.chirico@ambest.com
or
Public
Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
Rachelle
Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
