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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 14, 2012 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and issuer credit rating to “a-” from “bbb+” of Farmers Mutual Fire Insurance Company of Salem County (Farmers of Salem) (Salem, NJ). The outlook for both ratings has been revised to stable from positive.
The rating upgrades reflect Farmers of Salem’s consistently strong underwriting and operating earnings, as well as its solid risk-adjusted capitalization. The ratings also recognize Farmers of Salem’s prudent catastrophe management initiatives and local market expertise in New Jersey. These positive rating factors are reflective of management’s conservative underwriting strategy, which has resulted in significant annual surplus growth.
Partially offsetting these positive rating factors is Farmers of Salem’s property concentration in New Jersey. While exposure is spread throughout the state, a single state geographic concentration exposes earnings to catastrophic losses as well as market and regulatory concerns.
A.M. Best believes that Farmers of Salem is well positioned at its current rating level. Downward rating pressure could occur if catastrophic weather events or other increased loss patterns should lead to deterioration in Farmers of Salem’s underwriting performance and significant decline in its risk-adjusted capitalization.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies” and “Understanding BCAR for Property/Casualty Insurers.” Best’s Credit Rating Methodology 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.