A.M. Best Affirms Ratings of Agrinational Insurance Company

Business Wire,  June 23, 2008  

• E-mail
• Print
• Link

OLDWICK, N.J. -- 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.

COPYRIGHT 2008 Business Wire
COPYRIGHT 2008 Gale, Cengage Learning