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S&P Afrms Farmers Insur Grp Rtgs; Rves Otlk to Stable.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 17, 2003

Standard & Poor's Ratings Services said today that it affirmed it's 'A' counterparty credit ratings on Farmers Insurance Exchange, Farmer's Exchange Capital, and related companies (collectively Farmers) and its 'A' financial strength ratings on Farmers Insurance Exchange and related units.

Standard & Poor's also revised the outlook on Farmers to stable from negative.

"Net written premium is expected to grow 4%-6% in the next three years primarily through geographic expansion and increased product offerings to its existing customer base," said Standard & Poor's credit analyst Polina Chernyak. "Capital adequacy is expected to increase slightly, as underwriting results improve and somewhat restore capital over the short-term, and operating performance is expected to show continued improvement in the next two years, with the combined ratio in the 100%-102% range in 2003." Farmers Group Inc. (FGI) has kept the aggregate management fees broadly commensurate with the value of its services and Standard & Poor's expects this practice to continue prospectively.

Farmers is the fourth-largest writer of private passenger auto liability (after State Farm, Allstate, and Progressive) and the third-largest writer of homeowners multiperil (after State Farm and Allstate) in the U.S. Its acquisition of Foremost Corp. of America and its wholly owned subsidiaries (Foremost) has broadened Farmer's product line to include insurance for manufactured homes, recreational vehicles, and other specialty lines. Farmers is considered strategically important to FGI which is core to Zurich Financial Services. FGI provides a stable earnings stream to Zurich that is based on gross written premiums

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at All ratings affected by this rating action can be found on Standard & Poor's public Web site at; under Credit Ratings in the left navigation bar, select Credit Ratings Lists. Standard & Poor's ratings appear alphabetically.

Copyright 2003, Standard & Poor's Ratings Services
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Publication:Business Wire
Date:Sep 17, 2003
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