AM Best

A.M. Best Affirms Ratings of Foremost Corporation Group and Its Members



Frederick DeLeon

(908) 439-2200, ext. 5175

Gary Davis

(908) 439-2200, ext. 5665

Public Relations

Rachelle Morrow

(908) 439-2200, ext. 5378

Jim Peavy

(908) 439-2200, ext. 5644


OLDWICK, N.J. - MARCH 16, 2010 02:30 PM (EDT)
A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of "a" of Foremost Corporation Group (Foremost) (Caledonia, MI) and its members. The outlook for all ratings is stable. (See below for a detailed listing of the companies.)

The ratings reflect Foremost's adequate risk-adjusted capitalization, historically solid operating performance, established market position, as well as the advantages associated with being affiliated with Farmers Insurance Group (Farmers) (Los Angeles, CA). Offsetting rating factors include Foremost's above average underwriting leverage and significant exposure to weather-related losses.

Foremost's risk-adjusted capital position is based on its conservative investment risk profile and the catastrophe reinsurance provided by Farmers. Additionally, the group's historically favorable operating profitability, derived from its strict underwriting discipline and prudent risk management, has enabled Foremost to produce surplus growth in most years.

However, as a result of three hurricanes and several smaller weather-related events throughout 2008, Foremost experienced significant underwriting losses and a surplus decline. Unfavorable weather further contributed to sizeable underwriting losses in 2009. Despite these recent underwriting losses, Foremost's net exposure to hurricane loss events is substantially reduced by its sound reinsurance program, particularly the catastrophe reinsurance protection provided by Farmers.

The FSR of A (Excellent) and ICRs of "a" have been affirmed for Foremost Corporation Group and its following members:

- American Federation Insurance Company

- Foremost County Mutual Insurance Company

- Foremost Insurance Company Grand Rapids, Michigan

- Foremost Lloyds of Texas

- Foremost Signature Insurance Company

- Foremost Property and Casualty Insurance Company

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.

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.

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