A.M. Best Affirms Foremost Group's Rating Following Announcement of Acquisition by Farmers.OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 27, 1999-- A.M. Best Co. today affirmed the Foremost Corporation Group's A+ (Superior) rating following the recent announcement by Foremost Corporation of America that it has entered into a definitive agreement to be acquired for $812 million by the farmers, fire and truck insurance exchanges of the Farmers Insurance Group, a member of the Zurich Financial Services Zurich Financial Services Group is a major financial services group based in Zurich, Switzerland. Global operations North America The US consumer market is served primarily by Farmers Insurance Group the third largest personal lines property & casualty insurance Group. The acquisition will be funded with cash at Farmers' three exchanges. Additionally, Farmers Group, Inc. will inject $367 million into the Farmers exchanges in return for intermediate-term surplus notes to maintain liquidity at the exchange's following the purchase. Following discussions with management, A.M. Best expects that Foremost--a leading insurer of mobile homes and recreational vehicles--will be run autonomously and that the group's net catastrophe leverage and operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. will remain relatively consistent. Farmers plans to allow Foremost to retain its earnings to fund future business growth, in contrast to Foremost's historically large parental dividend demands to fund holding company debt and stockholder dividends. A.M. Best views the transaction as generally positive for Foremost because of the cross-selling opportunities with Farmers Insurance Group. Foremost and Farmers have very different distribution channels, products and geographic dispersion dispersion, in chemistry dispersion, in chemistry, mixture in which fine particles of one substance are scattered throughout another substance. A dispersion is classed as a suspension, colloid, or solution. . Foremost also will benefit from the considerable size and financial strength of Farmers Insurance Group, which eventually will provide catastrophe reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. to Foremost and its ultimate parent, Zurich Financial Services Group, a leading financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. group with worldwide sales of $45 billion. The five members of the Foremost Corporation Group are: American Federation Insurance Co.; Foremost County Mutual Insurance Co.; Foremost Insurance Company Grand Rapids Grand Rapids, city (1990 pop. 189,126), seat of Kent co., SW central Mich., on the Grand River; inc. 1850. The second largest city in the state, it is a distribution, wholesale, and industrial center for an area that yields fruit, dairy products, farm produce, , Mich.; Foremost Property & Casualty Insurance Co. and Foremost Signature Insurance Co. The A (Excellent) Best's Rating Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. of the 15 pool members of the Farmers Insurance Group and the A+ Best's Rating of Farmers New World Life Insurance Co. are not affected by the acquisition. A.M. Best Co., established in 1899, is the world's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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