Insurance rating agency A.M. Best Co. has affirmed the financial strength Mercer Island-based Company with a rating of "A" (Excellent) and issuer credit rating of "a" (Strong), according to a press release. The outlook for both ratings is stable.
Farmers New World Life, located at 3003 77th Avenue SE in the Town Center business area, is owned by Farmers Group Inc., a leading provider of personal lines insurance whose ultimate parent is Zurich Financial Services Ltd. With over 600 employees, the company is the largest employer on Mercer Island.
The rating agency's Financial Strength Rating offers six "secure" ratings: A++, A+, A, A-, B++ and B+. Long term credit ratings are slightly different, and four ratings are considered "investment grade": aaa, aa, a and bbb.
The local insurance company's rating, according to A.M. Best, reflects its strategic role and synergies within the Farmers Insurance Group, its excellent capitalization levels driven by favorable earnings trends and investment portfolio de-risking initiatives. The company continues to generate premium growth from ongoing initiatives to strengthen its cross-selling opportunities within the Farmers Insurance Group's property and casualty distribution channel.
Offsetting factors reflect aggregate investment losses in recent years largely due the economic crisis, exposure to interest-sensitive collateralized mortgage-backed securities and disintermediation risk due to an annuity block with minimal surrender charge protection.
A.M. Best believes Farmers New World is well positioned at its current rating level for the foreseeable future. Factors that could result in negative rating actions include a significant decline in risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio model or a sustained deterioration in earnings.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Understanding BCAR for Life/Health Insurers"; "Risk Management and the Rating Process for Insurance Companies"; and "A.M. Best's Liquidity Model for U.S. Life Insurers." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
— Information in article provided by a press release from A.M. Best Co.