S&P Lowers Farmers Automobile Ins. Rtg to 'BBBpi'
8 November 1999
S&P Lowers Farmers Automobile Ins. Rtg to 'BBBpi'
NEW YORK--Standard & Poor's CreditWire--Nov. 8, 1999--Standard & Poor's today lowered its financial strength rating on Farmers Automobile Insurance Assn. to triple-'Bpi'from single-'Api'.Farmers Automobile Insurance Assn. is a reciprocal company based in Pekin, IL and licensed in Illinois, Indiana, Iowa and Wisconsin. It commenced operations in 1921. About 85% of the company's business is in its major states of operation -- Illinois, Iowa and Indiana, and its major lines of business are auto and homeowners insurance.
The company is a member of Pekin Insurance Group, a mid-sized insurance group, which distributes its products primarily through independent general agents.
The rating is based on the interaffiliate pool consisting of Farmers Automobile Insurance Assn. (80.0%) and Pekin Insurance Co. (20.0%).
Major Rating Factors:
| -- | The company has a history of volatility in net premium income. |
| -- | Operating performance is modest, with a risk-adjusted return on revenue of 6%. In addition, the Standard & Poor's earnings adequacy ratio is weak, at 99%. |
| -- | This company's retained earnings, at 45% of total assets, is considered very good. |
| -- | Capitalization is extremely strong, as indicated by Standard & Poor's capital adequacy ratio of 283%. |
'Pi' ratings, denoted with a 'pi' subscript, are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. 'Pi' ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings.
Ratings with a 'pi' subscript generally are not modified with 'plus' or 'minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said. -- CreditWire