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18 July 2012
New Jersey
Reporter Mark Dugdale

A.M. Best rates Agrinational Insurance Company

A.M. Best has affirmed the financial strength (FSR) and issuer credit (ICR) ratings of Vermont-based Agrinational Insurance Company as “A- (Excellent)” and “a-” respectively. It added that the outlook for both ratings is stable.

The ratings agency has also assigned an FSR of “A- (Excellent)” and an ICR of “a-” to ADM Insurance Company, which is based in Arizona. The outlook for both ratings is stable.

The ratings for Agrinational are based on its “excellent capitalisation level, overall favourable operating performance and its strategic role as a captive insurer of Archer Daniels Midland Company”, said A.M Best.

“Partially offsetting these favourable rating factors is the high net retention on Agrinational’s property exposures, which has produced some variability in operating results. Also, as a single parent captive, Agrinational is exposed to concentration risk since its primary source of business is from one company. Additionally, Agrinational provides insurance for a limited amount of quasi third-party business sourced through an industry pooling arrangement.”

In 2010, Agrinational purchased all of the stock of Advanta Corporation, a dormant insurance shell. In 2011, the newly acquired company’s name was changed to ADM Insurance Company and it began writing multiple peril crop insurance and crop/hail named peril crop insurance.

Agrinational has invested in the leasing of railcars and barges that are production assets of ADM as a means of diversifying its investment portfolio.

A.M. Best said: “Management considers these investments as long term and a better alignment of the company’s capital structure while providing stability in cash flows and investment returns.”

As Agrinational’s subsidiary, Archer Daniels Midland Company is “rated with Agrinational due to its role and strategic importance to its ultimate parent, as demonstrated by the inter-company reinsurance arrangement between the affiliated members”.

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