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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 31, 2011 12:00 AM (EDT)
A.M. Best Co. has upgraded the issuer credit ratings (ICR) to "a+" from "a" and affirmed the financial strength rating of A (Excellent) of FMH Insurance Group (FMH) (Des Moines, IA) and its members. FMH is comprised of Farmers Mutual Hail Insurance of Iowa and Farmers Union Co-Op Insurance Company, Inc. (both of Des Moines, IA). The outlook for all ratings is stable.
The ratings reflect FMH's excellent capitalization, historically solid operating performance, strong agency relationships and the benefits derived from its market presence within the crop/hail and multiple peril crop insurance (MPCI) sectors. The ratings also recognize the added balance sheet protection provided by an aggregate stop loss reinsurance treaty, which minimizes the potential impact from severe underwriting losses, and management's knowledge and expertise in their highly specialized lines of business.
These positive rating factors are somewhat offset by the operational risk that changes in the agricultural marketplace will hinder execution of FMH's business plan or that government changes in the agricultural crop insurance program will run counter to the company's business plan; reliance on reinsurance; and potential for underwriting volatility with continued exposure to weather-related catastrophic events.
The stable outlook recognizes A.M. Best's expectation that FMH will sustain strong underwriting and operating results over the near term and capitalization will remain well supportive of its ratings.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Rating Members of Insurance Groups"; and "Natural Catastrophe Stress Test Methodology." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.