A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to John Deere Insurance Company (JDIC) of Johnston, Iowa. The outlook assigned to both ratings is stable.
The rating actions reflect JDIC’s strong capitalization, management’s history of operations as a managing general agent underwriting multiple peril crop insurance since 2005, and the benefits associated with being ultimately owned by Deere & Co., a provider advanced products and services for agriculture, forestry, construction, lawn and turf care, landscaping and irrigation.
The ratings and outlook also reflect A.M. Best’s expectation that JDIC’s management will successfully execute its business plan.
These positive rating factors are offset by the execution risk associated with starting up a stand-alone insurance company with an ambitious growth target set for the next five years, as well as the operational risk associated with operating within the federally administered multiple peril crop insurance program.
This program continues to experience multiple and significant changes in recent years, including, but not limited to, changing government rules and mandates, crop prices and weather events, all of which could affect JDIC’s business plans.
JDIC was formed via the purchase of HCC Insurance Company (HCCIC) from its parent, Houston Casualty Company, in a stock purchase agreement that closed on March 18, 2010. HCCIC was then renamed John Deere Insurance Company effective March 19, 2010.
JDIC is led by Donald Preusser, vice president of Deere Credit Services Inc. and president of John Deere Insurance Company, who brings 25 years of broad industry experience in property/casualty insurance.
A.M. Best expects that Preusser and the JDIC management team will establish strong risk selection, underwriting, pricing and claim management controls to ensure adherence to the company’s developed operating plan for serving the multiple peril crop insurance market.
Despite JDIC’s somewhat aggressive growth plans over the medium term, capitalization is expected to be sufficient to support the company’s operations, which also benefit from the financial flexibility afforded through JDIC’s affiliation with Deere & Co.
Source: A.M. Best
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