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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 02, 2015 03:13 PM (EDT)
A.M. Best has affirmed the financial strength ratings (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a” of the members of Farmers Insurance Group (Farmers) and Farmers Reinsurance Company. Concurrently, A.M. Best has affirmed the ICR of “a” of Farmers’ management company and attorney-in-fact, Farmers Group Inc. (FGI), as well as the issue ratings of “bbb+” on the outstanding surplus notes of Farmers Insurance Exchange (Exchange) and Farmers Exchange Capital. The outlook for all ratings is stable. All companies are domiciled in Los Angeles, CA, unless otherwise specified. (Please see the link below for a detailed listing of the companies and ratings.)
The ratings reflect Farmers’ market leadership position, prudent risk management efforts, adequate risk-adjusted capitalization and solid historical operating performance. In addition, strategic acquisitions have improved Farmers’ product and geographic diversification, as well as created a multi-channel distribution system with captive agents, independent agents and direct-to-consumer sales. Collectively, the members of Farmers are the sixth-largest personal lines insurer in the United States with a particularly strong market position in the western and southwestern regions.
Partially offsetting these strengths is Farmers’ variable operating performance due in part to catastrophe exposure. However, Farmers continues to take considerable measures to enhance its underwriting performance through targeted pricing actions and risk-mitigation strategies, revised product offerings, strengthened underwriting controls and increased utilization of segmentation.
In addition, the ratings reflect the group’s strategic importance to Zurich Insurance Group, Ltd. (Zurich) (Switzerland). Although Zurich has no ownership interest in the Exchange, both entities are strategically linked via a management relationship between the Exchange 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 Exchange, A.M. Best deviated from its “Rating Members of Insurance Groups” criteria by providing Farmers with rating enhancement from Zurich. As prescribed by the criteria, 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 Exchange are independent.
For a complete listing of the members of Farmers Insurance Group’s FSRs, ICRs and issue ratings, please visit www.ambest.com/press/100207FARMERS.pdf .
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.
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