OLDWICK, N.J.--()--A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of John Deere Insurance Company (JDIC) (Johnston, IA). The outlook assigned to both ratings is stable.
“Risk Management and the Rating Process for Insurance Companies”
The rating reflects JDIC’s strong capitalization, management's history of operations as a managing general agent underwriting multiple peril crop insurance since 2005, and the explicit support and benefits associated with being ultimately owned by Deere & Company, a world leader in providing advanced products and services for agriculture, forestry, construction, lawn and turf care, landscaping and irrigation. John Deere also provides financial services worldwide and manufactures and markets engines used in heavy equipment. The outlook reflects A.M. Best's view that business plans remain reasonable given management's operating assumptions and the financial support of Deere & Company.
Somewhat offsetting these positive factors is the poor operating performance recorded in 2011, partially driven by significant expenditures on technology, elevated underwriting leverage and the execution risk associated with starting up a stand-alone insurance company. Other offsetting factors include the operational risk associated with the agricultural marketplace where government program changes and crop prices or weather events could affect business plans. The company also benefits from the strong brand recognition and financial support provided through the association with the Deere & Company organization. As both companies are deeply involved in agricultural businesses, JDIC presents an excellent fit for the overall enterprise.
The rating outlook could be lowered if operating performance continues to fall short of A.M. Best's expectations.
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: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Catastrophe Analysis in A.M. Best Ratings”; and “Evaluating Non-Insurance Parents.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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