|[June 13, 2014]
A.M. Best Affirms Ratings of Rural Community Insurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best has affirmed the financial strength rating of A
(Excellent) and the issuer credit rating of "a+" of Rural Community
Insurance Company (RCIC) (Anoka, MN). The outlook for both ratings
The ratings reflect RCIC's excellent level of risk-adjusted
capitalization, historically profitable operating performance and the
benefits derived from its leading position within the multi-peril crop
insurance (MPCI) industry. In addition, significant financial
flexibility and operating liquidity is afforded through the company's
ultimate parent, Wells Fargo (News - Alert) & Company (NYSE:WFC), one of the
largest publicly traded financial services organizations in the United
States. The ratings also recognize the added balance-sheet protection
provided by an aggregate stop loss reinsurance treaty, which minimizes
the potential impact from severe underwriting losses and management's
knowledge and expertise in the highly specialized MPCI marketplace.
The positive rating factors are somewhat offset by RCIC's rather narrow
product mix and the potential for underwriting volatility due to
operational risk from changes in the agricultural marketplace or
government changes in either the agricultural crop insurance program or
farm bill, which could run counter to RCIC's business plan. While RCIC
relies heavily on reinsurance, concern with respect to that reliance is
somewhat mitigated by the high credit quality of its reinsurers,
including the Federal Crop Insurance Corporation.
Positive ratings changes are not expected in the near to medium term.
However, negative actions could be taken if risk-adjusted capitalization
or operating performance falls markedly short of A.M. Best's
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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