AM Best assigns ratings to Archer Daniels Midland Company captives

Ratings agency AM Best has assigned a financial strength rating (FSR) of A- (Excellent) to Agrinational Illinois Insurance Company, the Illinois based captive insurer of food processing and commodities trading corporation Archer Daniels Midland Company (ADM).

Concurrently, AM Best has also affirmed the FSR of A- for Vermont-based Agrinational Insurance Company and its wholly owned subsidiary, ADM Insurance Company.

The ratings reflect their adequate risk-adjusted capitalisation and strategic role as captive insurers of ADM.

They also take into account a significant reduction in premium volume following the sale of Agrinational’s subsidiary, ADM Crop Risk Services, to Validus Holdings in May 2017.

Partially offsetting the favourable rating factors is the high net retention on property exposures, which has produced some variability in operating results and capital. Also, as a single parent captive, Agrinational is exposed to concentration risk as a captive’s primary source of business is generally from one company. This is somewhat minimised by the group’s diversified book of business and the parent’s geographically dispersed assets. The captive program also provides insurance for a limited amount of third-party business sourced through an industry pooling arrangement.

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