OLDWICK, NJ–(BUSINESS WIRE)–AM Best removed ADM Insurance Company’s (Phoenix, AZ). The ADM insurance company was a member of the ADM insurance group. AM Best removed these credit ratings (ratings) as the company was sold to an unaffiliated company.
At the same time, AM Best confirmed the FSR of A- (Excellent) and the long-term ICR of “a-” (Excellent) of Agrinational Insurance Company (Agrinational) (Burlington, VT), the remaining member of the band. The outlook for these ratings is stable.
The ratings reflect Agrinational’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate business risk management.
The ratings affirmation reflects the highest levels of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and takes into account high leverage metrics that expose Agrinational to volatility in crisis period. Agrinational sold its subsidiary, ADM Crop Risk Services, Inc., in 2017, resulting in a significant reduction in Agrinational’s premium volume. This reshaped the profile of the company’s insurance business from a captive with significant third-party business to a captive primarily insuring the risks of affiliated entities. Agrinational’s exposures include high net retention on real estate exposures. Due to management’s refocus on core businesses and exits from restrictive and non-core exposures, Agrinational’s operating performance is expected to remain adequate due to recently implemented rate increases, as well as its low cost-structure. expenses and its focus on ERM.
The ratings also reflect the improved rating provided by the company’s ultimate parent, Archer Daniels Midland Company (ADM) [NYSE:ADM], one of the world’s largest agricultural processors and food ingredient suppliers. Agrinational is strategically positioned as a captive insurance company for ADM, playing a vital role in meeting certain global insurance requirements and providing risk management services to the organization. ADM in turn provides implicit and explicit support to Agrinational.
AM Best remains the leading rating agency for alternative risk transfer entities, with more than 200 such vehicles rated in the United States and around the world. For Best’s current credit ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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