OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” to Agrinational Illinois Insurance Company (Decatur, IL). The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, the FSR of A- (Excellent) and the Long-Term ICRs of “a-” of Agrinational Insurance Company (Agrinational) (Burlington, VT) and its wholly owned subsidiary, ADM Insurance Company (ADMIC) (Phoenix, AZ) have been affirmed. The outlook of these ratings is stable.
The ratings reflect their adequate risk-adjusted capitalization and strategic role as captive insurers of Archer Daniels Midland Company [NYSE: ADM]. The ratings also take into account a significant reduction in premium volume following the sale of Agrinational’s subsidiary, ADM Crop Risk Services, Inc., to Validus Holdings, Ltd. in May 2017.
Partially offsetting the favorable rating factors is the high net retention on property exposures, which has produced some variability in operating results and capital. Also, as a single parent captive, Agrinational is exposed to concentration risk as captives’ primary source of business is generally from one company. This is somewhat minimized by the group’s diversified book of business and the parent’s geographically disbursed assets. The captive program also provides insurance for a limited amount of 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, tractor trailers, tugboats and barges. Management considers these investments as long term and better aligned with Agrinational’s capital structure, while providing stability in investment returns.
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