Major Rating Factors: Weak overall results on stability tests (1.9 on a scale of 0 to 10) including weak financial strength of affiliated Farmers Insurance Group of Companies and weak results on operational trends. Fair reserve development (4.6) as reserves have generally been sufficient to cover claims.
Other Rating Factors: Good overall profitability index (5.7). Good expense controls. Return on equity has been low, averaging 1.5% over the past five years. Strong long-term capitalization index (10.0) based on excellent current risk adjusted capital (severe and moderate loss scenarios), despite some fluctuation in capital levels. Excellent liquidity (8.7) with ample operational cash flow and liquid investments.
Stability Factors: R - Concerns about the financial strength of its reinsurers. T - Significant trends in critical asset, liability, income or expense items.
Principal Lines of Business: Personal/comm auto (100.0%)
Licensed in: All states except AK, CA, MA, MI, MN, MS, NV, NJ, NY, NC, TX, WA, WY, PR
Principal Investments: Investment grade bonds (91.3%), cash (8.7%)