CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - NOVEMBER 17, 2008 12:00 AM (EST)
A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and issuer credit ratings (ICR) to "a-" from "bbb+" of Farmers & Mechanics Group (Farmers & Mechanics) and its member, Farmers and Mechanics Mutual Insurance Company of West Virginia (both of Martinsburg, WV). The outlook for both ratings is stable.
The rating upgrades reflect Farmer & Mechanics' strong operating results over the past several years and its significantly improved capital position. Farmers & Mechanics' improved operating profitability has benefited from management's underwriting initiatives, conservative operating philosophy, favorable weather and firm market conditions.
Partially offsetting these positive rating factors is Farmers & Mechanics' geographic concentration as a predominant property writer, which exposes earnings to localized and severe weather-related events. However, management's risk management initiatives and sound reinsurance program have tempered these risks. Although Farmers & Mechanics' experienced sizeable unrealized capital losses in its equity portfolio in 2008, equity leverage is conservative and the bond portfolio remains very high in quality.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
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.