A.M. Best Upgrades Ratings of Federated Rural Electric Insurance Exchange
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http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130329:nBw295152a OLDWICK, N.J.--(Business Wire)-- A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and issuer credit rating to "a" from "a-" of Federated Rural Electric Insurance Exchange (FREIE or the Exchange) (Lenexa, KS). The outlook for both ratings has been revised to stable from positive. This rating action reflects FREIE`s strong capitalization, consistently favorable operating performance and firmly established market position as a specialty writer for rural electric cooperative utilities and rural telephone systems. These positive rating factors are derived from the Exchange`s prudent underwriting standards, firm pricing within its major books of business, strict loss control processes and strong relationships with its insureds. Partially offsetting these positive rating factors are FREIE`s limited business scope and modest adverse loss reserve development on its core lines of business for certain prior accident years. However, loss reserve development has been favorable in more recent years. Although FREIE is susceptible to claims severity, this exposure is somewhat mitigated by an active management that is combined with a comprehensive reinsurance program. The Exchange continues to be supported by the National Rural Utilities Cooperative Finance Corporation (CFC). CFC holds the Exchange`s surplus note and has demonstrated its commitment through its willingness to be flexible with the terms of the note. In addition, the business concentration is partially offset by FREIE`s geographic spread of risk. A.M. Best believes that both earnings and surplus will continue to grow modestly but without the volatility typically seen in most insurers` results. The ratings could be downgraded or the outlook lowered if operating performance falls markedly short of A.M. Best's expectations, including if a significant spike in losses jeopardizes FREIE's risk-adjusted capital position. 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. Key criteria utilized include: "Catastrophe Analysis in A.M. Best Ratings"; "Equity Credit for Hybrid Securities"; "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; and "The Treatment of Terrorism Risk in the Rating Evaluation." 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. Copyright © 2013 by A.M. Best Company, Inc.ALL RIGHTS RESERVED. A.M. Best Co. Scott Dodd Financial Analyst (908) 439-2200, ext. 5582 email@example.com or Gerard Altonji Assistant Vice President (908) 439-2200, ext. 5626 firstname.lastname@example.org or Rachelle Morrow Senior Manager, Public Relations (908) 439-2200, ext. 5378 email@example.com or Jim Peavy Assistant Vice President, Public Relations (908) 439-2200, ext. 5644 firstname.lastname@example.org Copyright Business Wire 2013
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