8 November 2013Actuarial & underwriting

Agrinational receives rating affirmation

Vermont-domiciled Agrinational Insurance Company has received an A- (Excellent) rating affirmation from AM Best as the captive maintains its strong operating performance.

The rating agency praised the captive’s capital levels, operating performance and strategic role within its parent Archer Daniels Midland Company’s enterprise risk management approach, but cautioned that as a single parent captive it is exposed to concentration risk. Although the captive does write some related risk, AM Best described this as “quasi third party businesses sourced through an industry pooling arrangement”.

AM Best added that the captive has high net retention on its property exposures, “which has produced some variability in operating results”. It explained that operating results would be central to any future upgrade or downgrade of its current rating, as would results at the parent company.

AM Best added that “as a means of diversifying its investment portfolio, Agrinational has invested in the leasing of railcars and barges that are production assets of ADM. Management considers these investments as long term and a better alignment of Agrinational's capital structure while providing stability in cash flows and investment returns.”