The ratings reflect the adequate risk-adjusted capitalisation and strategic role as captive insurers of Archer Daniels Midland Company, an American global food processing and commodities trading corporation.
The ratings 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 for $127.5 million.
Partially offsetting the positive ratings factors, A.M. Best suggested that as a single parent, Agrinational is exposed to concentration risk as a captive’s primary source of business is generally from one company.
The ratings agency said: “This is somewhat minimised by the group’s diversified book of business and the parent’s geographically dispersed assets. The captive programme also provides insurance for a limited amount of third-party business sourced through an industry pooling arrangement.”