CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 16, 2010 02:30 PM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a" of Farmers Insurance Group (Farmers) and its members. Concurrently, A.M. Best has affirmed the debt ratings on the outstanding surplus notes of Farmers Insurance Exchange and Farmers Exchange Capital, and the ICR of "a" of Farmers' management company and attorney-in-fact, Farmers Group Inc. (FGI). The outlook for all ratings is stable. All the above companies are domiciled in Los Angeles, CA. (See below for a detailed listing of the companies and ratings.)
The ratings reflect Farmers' market leadership position, prudent risk management efforts and strategic importance to Zurich Financial Services Ltd. (Zurich) (Switzerland). Farmers' is the third-largest personal lines insurer in the United States, with a particularly strong market position in the western and southwestern United States. Although, Zurich has no ownership interest in the Farmers Insurance Exchange, Farmers accounts for a significant portion of Zurich's worldwide premiums, and has strong brand name recognition.
In addition, the recent acquisition of 21st Century Insurance Company (Woodland Hills, CA), has allowed Farmers entry into the direct market through a well established platform. The acquisition also broadened and improved Farmers' product and geographic diversification.
Offsetting these rating strengths is Farmers' moderately volatile operating performance due to catastrophe exposure, as well as elevated underwriting leverage. However, Farmers has taken considerable measures to enhance its underwriting performance through targeted pricing actions, strengthened underwriting controls and increased utilization of segmentation. In addition, Farmers has broadened its product and geographic diversity through prior strategic acquisitions and focused growth plans.
The FSR of A (Excellent) and ICRs of "a" have been affirmed for Farmers Insurance Group and its following members:
- Farmers Insurance Exchange
- Fire Insurance Exchange
- Truck Insurance Exchange
- 21st Century Casualty Company
- 21st Century Insurance Company
- 21st Century Insurance Company of the Southwest
- American International Pacific Insurance Company
- AIG National Insurance Company, Inc.
- American Pacific Insurance Company, Inc.
- American International Insurance Company
- American International Insurance Company of California, Inc.
- American International Insurance Company of Delaware
- American International Insurance Company of New Jersey
- AIG Advantage Insurance Company
- AIG Centennial Insurance Company
- AIG Auto Insurance Company of New Jersey
- AIG Preferred Insurance Company
- AIG Premier Insurance Company
- AIG Indemnity Insurance Company
- Civic Property and Casualty Company
- Exact Property and Casualty Company
- Farmers Insurance Company, Inc.
- Farmers Insurance Company of Arizona
- Farmers Insurance Company of Idaho
- Farmers Insurance Company of Oregon
- Farmers Insurance Company of Washington
- Farmers Insurance Hawaii, Inc.
- Farmers Insurance of Columbus, Inc.
- Farmers New Century Insurance Company
- Farmers Reinsurance Company
- Illinois Farmers Insurance Company
- Mid-Century Insurance Company
- Neighborhood Spirit Property and Casualty Company
- New Hampshire Indemnity Company, Inc.
- Texas Farmers Insurance Company
- Bristol West Casualty Insurance Company
- Bristol West Insurance Company
- Coast National Insurance Company
- Security National Insurance Company
- Bristol West Preferred Insurance Company
- Farmers Texas County Mutual Insurance Company
- Mid-Century Insurance Company of Texas
The ICR of "a" has been affirmed for Farmers Group Inc.
The following debt ratings have been affirmed:
Farmers Insurance Exchange—
- "bbb+" on USD 100 million 6.0% surplus notes, due 2014
- "bbb+" on USD 300 million 8.625% surplus notes, due 2024
Farmers Exchange Capital—
- "bbb+" on USD 500 million 7.05% surplus notes, due 2028
- "bbb+" on USD 150 million 7.2% surplus notes, due 2048
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.