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Financial Information

The Pekin Insurance Group is comprised of four companies:

  • The Farmers Automobile Insurance Association (FAIA): Formed as a reciprocal exchange in 1921, FAIA is a full lines property & casualty company.
    Audit Report
  • Pekin Insurance Company (PIC): A capital stock company whose shares are wholly owned by FAIA. PIC was formed in 1961 and also writes a full array of property & casualty products.
    Audit Report
  • Pekin Life Insurance Company (PLIC): A capital stock company which was formed in 1965. The majority shareholder of PLIC is FAIA and PIC with the remaining shares traded publicly. PLIC writes a full array of life, health, and annuity products.
    Annual Shareholders’ Report
    Letter to Shareholders – Current Financial Results
  • PAC, Inc.: A premium finance company which is wholly owned by Pekin Insurance Company. Its primary function is to provide installment payment of insurance premiums.

 



A.M. Best Company is a full-service credit rating organization dedicated to serving the insurance industry. Policyholders refer to Best’s ratings and analysis as a means of assessing the financial strength and creditworthiness of risk-bearing entities and investment vehicles.

They have been assigning credit ratings since 1906, making it the first of today’s rating agencies to use symbols to differentiate the relative creditworthiness of companies.

Best’s Credit Ratings are independent opinions regarding the creditworthiness of an issuer or debt obligation. Best’s Credit Ratings are based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile, or, where appropriate, the specific nature and details of a debt security.

For 2018, A.M. Best has affirmed the Financial Strength Rating (FSR) of “A” (Excellent) of Pekin Insurance Group and our two intercompany pool members, The Farmers Automobile Insurance Association and its wholly owned subsidiary, Pekin Insurance Company. Financial Strength Ratings are published in A.M. Best’s Insurance Reports and represent their independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations. The affirmed rating reflects our balance sheet strength which A.M. Best categorizes as strongest, as well as adequate operating performance, neutral business profile, and appropriate enterprise risk management. Strong risk-adjusted capitalization is driven by our conservative investment portfolio and historically favorable loss reserve developments. This rating acknowledges our expectation for improved operating results based on underwriting initiatives and upgraded technology. A.M. Best also noted management’s efforts to continually enhance our enterprise risk management program to support our organization’s risk profile.

The outlook for the FSR remains negative. A.M. Best stated that the outlook reflects deterioration in underwriting performance, driven by weather-related losses and rising loss costs in the auto business. 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, preparation for entry into another southwestern state, restructuring of reinsurance contracts, utilization of actual cash value settlement policy language, and implementation of By-Peril rating. The reasons behind the poor automobile results are well-documented in public forums and include more cars on the road driving more miles, higher medical costs, higher repair costs for newer vehicles, and distracted driving. To address this continuing trend, among other measures, we have tightened eligibility guidelines, revised financial stability scores, updated factors for violations and accidents, and continued the development of predictive analytic 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.

A.M. Best has also affirmed the FSR of “A-” (Excellent) for Pekin Life Insurance Company. The outlook remains stable. The ratings of Pekin Life Insurance Company reflect its integral role and positive contribution to the Pekin Insurance Group, as well as its strong risk-adjusted capitalization and a diversified product portfolio.

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