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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 01, 2009 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating to B++ (Good) from B+ (Good) and issuer credit rating to "bbb" from "bbb-" of Farmers Mutual Fire Insurance Company of Salem County (Salem) (Salem, NJ). The outlook for both ratings is stable.
The rating actions reflect Salem's improved operating performance along with its favorable risk-adjusted capitalization, which solidly supports the current ratings.
These positive rating factors are partially offset by the company's geographic concentration of risk in New Jersey, which in the past has resulted in an inconsistent operating performance. Salem's previous unfavorable operating performance was related to underground storage tank (UST) losses and weakened risk-adjusted capitalization due to increases in modeled probable maximum loss from its concentration of business along the New Jersey coast.
However, Salem has managed to significantly lessen these accumulated risk exposures by reducing writings along catastrophe-exposed areas. The company also has witnessed a significant decrease in claims relating to UST losses due partly to application of stricter underwriting standards. The combination of these favorable trends in accumulated risk exposures has improved Salem's operating performance and has resulted in stronger risk-adjusted capitalization.
The outlook reflects improved operating performance and favorable risk-adjusted capitalization.
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.