AM Best has withdrawn the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of ADM Insurance Company (Phoenix, AZ). ADM Insurance Company was a member of ADM Insurance Group. AM Best has withdrawn these Credit Ratings (ratings) as the company has been sold to a non-affiliated company.

At the same time, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Agrinational Insurance Company (Agrinational) (Burlington, VT), the group’s remaining member. The outlook of these ratings is stable.

The ratings reflect Agrinational’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The affirmation of the ratings reflects the strongest levels of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and takes into account elevated leverage metrics that expose Agrinational to volatility in times of stress. Agrinational sold its subsidiary, ADM Crop Risk Services, Inc., in 2017, which resulted in a significant reduction of Agrinational’s premium volume. This has reshaped the profile of the company’s insurance operations from that of captive with substantial third-party business to a captive primarily insuring risks of affiliated entities. Agrinational’s exposures include high net retention on property exposures. Due to management’s refocus on core business and exits from restrictive and non-core exposures, the operating performance of Agrinational is expected to remain adequate due to rate increases recently implemented, as well as its low cost-expense structure and focus on ERM.

The ratings also reflect rating enhancement provided by the company’s ultimate parent, Archer Daniels Midland Company (ADM) [NYSE:ADM], one of the world’s largest agricultural processors and food ingredient providers. Agrinational holds a strategic position as the captive insurance company for ADM, serving a critical role in meeting certain global insurance requirements and providing risk management services to the organization. ADM in turn provides implicit and explicit support to Agrinational.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

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