A.M. Best Affirms Rating of Farmers' Mutual Insurance Association and Farmers' Mutual Insurance Limited.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of Farmers' Mutual Insurance Association (FMIA FMIA, n.pr See angle, Frankfort-mandibular incisor. ) (New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. ) and its core subsidiary, Farmers' Mutual Insurance Limited (FMIL FMIL Future Mother-In-Law ) (New Zealand), together, the core companies of Farmers' Mutual Group (FMG FMG 1 Foreign medical graduate, see there 2. Frequency modulation generator ). The rating outlook is stable. The rating reflects the group's strong capitalization, strong market presence in rural New Zealand, broad distribution capabilities and improving operating efficiency. FMG's risk-adjusted capitalization demonstrated reasonable growth during the year, due mainly to FMIA's and FMIL's strong operating performance. FMIA's combined ratio declined from 80.6% in 2004 to 74.3% in 2005. FMIL's combined ratio declined from 87.4% in 2004 to 74.4% in 2005. Intra-group transfer of assets The conveyance of something of value from one person, place, or situation to another. The law recognizes that persons are generally entitled to transfer their assets to whomever they wish and for whatever reason. The most common means of transfer are wills, trusts, and gifts. contributed to substantial strengthening of FMIL's capitalization, as measured by Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. . FMG has established a strong presence in the rural New Zealand market as a result of its long operating history. The group's commitment to self distribution of insurance products in these rural communities has resulted in relatively stable business growth. FMIA's and FMIL's gross written premium increased by 9.1% and 15.5%, respectively, in 2005. These positive factors are partially offset by FMG's exposure to catastrophic risks, intense market competition and limited long-term growth opportunities. Similar to other general insurers in New Zealand, FMG is exposed to catastrophic perils such as flooding, and being a specialist rural insurer magnifies this risk. However, the company is reasonably well protected by its 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. programs. FMG's market niche, focusing on rural insurance, limited its long-term growth opportunities. However, the company's expansion into the provincial commercial sector has broadened its growth potential. Increasing competition in rural insurance markets continues to exert pressure on FMG's profits. For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion