13 Insurers See Ratings Updates
Aflac, Farmers, Fidelity, Markel, Wellmark and others receive updates.
Insurance Networking News, June 7, 2011
A.M. Best, Fitch Ratings, Moody’s Investors Service and Standard & Poor’s (S&P’s) released ratings updates. The following are some of the most recent:
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Aflac Inc. and its subsidiaries
A.M. Best has affirmed the financial strength rating of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of American Family Life Assurance Co. of Columbus, American Family Life Assurance Co. of Columbus (Japan Branch), its wholly owned subsidiary, American Family Life Assurance Co. of New York and Continental American Insurance Co.
Concurrently, A.M. Best has affirmed the ICR of “a-” and all existing debt ratings of the ultimate parent, Aflac Inc. (Aflac). The outlook for all ratings is stable.
Aflac’s ratings reflect its continued strong profitable operating results, solid capital position and strong brand recognition in Japan and the United States. Aflac’s financial leverage remains below 25%, which is consistent with its current ratings. In addition, Aflac’s management has implemented an initiative to methodically reduce the risk in its investment portfolio.
EMC Insurance Group Inc. and its affiliates
A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating of “a-” of EMC Insurance Co. (EMC) and its seven property and casualty insurance company affiliates, which operate under an inter-company pooling agreement led by Employers Mutual Casualty Co. (EMCC) and EMC Reinsurance Co. (EMC Re), a reinsurance company owned indirectly by EMCC.
Concurrently, A.M. Best has affirmed the ICR of “bbb-” of EMC Insurance Group Inc., a downstream holding company majority owned by EMCC and the immediate parent of EMC Re. The outlook for all ratings is positive.
The ratings of EMC and EMC Re reflect their strong level of risk-adjusted capital, which is supported by the consistent generation of pre-tax operating and net income; favorable development of prior years’ loss and loss adjustment expense reserves in recent years; generally favorable core underwriting results; and the benefits the companies will continue to derive from pricing, risk selection and claims actions taken in recent years.
Farmers Insurance Group and its members
A.M. Best 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.
In addition, A.M. Best has withdrawn the ICR of “a” and FSR of A of Foremost Corp. Group, as the members are now rated as part of Farmers.
The ratings reflect Farmers’ market leadership position, prudent risk-management efforts, strong risk-adjusted capitalization and strategic importance to Zurich Financial Services Ltd. (Zurich). 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, both entities are strategically linked via a management relationship between the Exchanges and FGI, Zurich’s wholly owned subsidiary. This linkage provides Zurich with a source of consistent fee income.
Given the structural relationship between Zurich and the Exchanges, A.M. Best deviated from its “Rating Members of Insurance Groups” methodology by providing Farmers with rating enhancement from Zurich.
As prescribed by the methodology, to be eligible for rating enhancement, an individual company must operate under common ownership, with the entity providing lift or maintaining board control together with common management. In this case, while there is common management, the boards of FGI and the Exchanges are independent.
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