A.M. Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit ratings (ICR) of “a-” of Agrinational Insurance Company and its wholly-owned subsidiary, ADM Insurance Company.
Both companies are headquartered in Burlington, Vermont. The outlook of these credit ratings is stable.
The ratings reflect ADM Insurance Group’s balance sheet strength, which A.M. Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
A.M. Best states that the affirmation of the ratings reflects the strongest levels of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, and takes into account elevated leverage metrics that expose the group to volatility in times of stress.
Agrinational Insurance Company sold its subsidiary, ADM Crop Risk Services, in 2017, which, A.M. Best says resulted in a significant reduction of Agrinational Insurance Company’s premium volume.
The rating firm highlights that this has reshaped the profile of the company’s insurance operations from that of a captive with substantial third-party business to a captive primarily insuring risks of affiliated entities.
ADM Insurance Group’s exposures include high net retention on property exposures.
“Due to the management’s refocusing on core business and exit from restrictive and non-core exposures, the operating performance of the insurance entities is expected to remain adequate due to rate increases recently implemented, as well as its low cost-expense structure and focus on ERM,” A.M. Best explains.
The ratings also reflect rating enhancement provided to ADM Insurance Group by the group’s ultimate parent, Archer Daniels Midland Company, one of the world’s largest agricultural processors and food ingredient providers.
The group holds a strategic position as the captive insurance companies for the ADM, serving a critical role in meeting certain global insurance requirements and providing risk management services to ADM and its subsidiaries. ADM in turn provides implicit and explicit support to ADM Insurance Group.
