A.M. Best has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and the long-term issuer credit rating (Long-Term ICR) to “a” from “a-” of American Agricultural Insurance Co. (AAIC) in Indianapolis, Ind. The outlook for these ratings has been revised to stable from positive.
The rating action reflects AAIC’s strong risk-adjusted capitalization, continued improvement in underwriting and operating results as reflected by five straight years of underwriting and operating profitability.
These results are driven by aggressive risk management initiatives which included a substantial restructuring of the company’s overall book of business coupled with milder weather patterns. Specifically, AAIC has reduced its previously extensive property catastrophe exposure, particularly in its niche of reinsuring carriers associated with Farm Bureau.
The company also is growing its non-catastrophe prone casualty business primarily underwritten in its broker-assumed segment, with those results having shown considerable improvement over the past five years.
Additionally, AAIC maintains a favorable expense structure due in part to its unique market position as the primary reinsurer to the Farm Bureau insurance companies.
Partially offsetting these positive rating factors is the company’s ongoing susceptibility to severe tornado/hail storms, hurricanes or an earthquake along the New Madrid fault, which stems from its large property book of business, elevated underwriting leverage and above average reinsurance dependence.
Source: A.M. Best
Topics Agribusiness
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