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A.M. Best Announces Financial Strength Ratings

A.M. Best Affirms Financial Strength Ratings of Pekin Life Insurance Company

A.M. Best has affirmed the “A-” (Excellent) Financial Strength Rating (FSR) for Pekin Life Insurance Company. The outlook remains stable. The ratings of Pekin Life Insurance Company reflect a very strong balance sheet, its strategic role within the organization, diversified product offerings, and a high quality investment portfolio.

A.M. Best Downgrades Financial Strength Ratings of The Farmers Automobile Insurance Association and Pekin Insurance Company

A.M. Best has downgraded the FSR of Pekin Insurance® Group and our two intercompany pool members, The Farmers Automobile Insurance Association and its wholly owned subsidiary, Pekin Insurance Company from “A” (Excellent) to “A-” (Excellent). This rating represents their independent opinion of our financial strength and our excellent ability to meet ongoing insurance obligations. The change is primarily attributable to the ongoing impact of catastrophe and automobile losses upon our operating results. The rating of “A-” (Excellent) reflects our balance sheet strength which A.M. Best categorizes as very strong, as well as our neutral business profile and appropriate enterprise risk management. Strong risk-adjusted capitalization is driven by our conservative investment portfolio, historically favorable loss reserve developments, and prudent reinsurance program.

The outlook for the FSR is upgraded to stable.

Pekin Insurance recognizes its vulnerability to losses from wind, hail, and tornado and in recent years has taken many significant steps to mitigate our exposure, including entry into Arizona, preparing for entry to more southwestern states, restructuring of reinsurance contracts, utilization of actual cash value settlement policy language, and implementation of predictive modeling. The strength of our financial position allows us to take a longer-term view of operations, and we continue to invest in software and technology through our Pekin Insurance Virtual Overall Transformation project. The new policy administration platform will give us a competitive edge and enable efficient growth and profitability for many years.

Key strategic goals that will improve our operating results are:

  • Increase our commercial lines writings as a percentage of our total writings
  • Improve our combined ratio by expanding our use of predictive modeling and realizing operating efficiencies through significant technology upgrades
  • Increased efforts toward profitable growth in new and existing states

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