News Column

A.M. Best Affirms Ratings of Rural Community Insurance Company

June 13, 2014



OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of ďa+Ē of Rural Community Insurance Company(RCIC) (Anoka, MN). The outlook for both ratings is stable.

The ratings reflect RCICís excellent level of risk-adjusted capitalization, historically profitable operating performance and the benefits derived from its leading position within the multi-peril crop insurance (MPCI) industry. In addition, significant financial flexibility and operating liquidity is afforded through the companyís ultimate parent, Wells Fargo & Company (NYSE:WFC), one of the largest publicly traded financial services organizations in the United States. The ratings also recognize the added balance-sheet protection provided by an aggregate stop loss reinsurance treaty, which minimizes the potential impact from severe underwriting losses and managementís knowledge and expertise in the highly specialized MPCI marketplace.

The positive rating factors are somewhat offset by RCICís rather narrow product mix and the potential for underwriting volatility due to operational risk from changes in the agricultural marketplace or government changes in either the agricultural crop insurance program or farm bill, which could run counter to RCICís business plan. While RCIC relies heavily on reinsurance, concern with respect to that reliance is somewhat mitigated by the high credit quality of its reinsurers, including the Federal Crop Insurance Corporation.

Positive ratings changes are not expected in the near to medium term. However, negative actions could be taken if risk-adjusted capitalization or operating performance falls markedly short of A.M. Bestís expectations.

The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís 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 © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.



A.M. Best

Brian OíLarte,908-439-2200, ext. 5138

Senior Financial Analyst

brian.o'larte@ambest.com

or

Jennifer Marshall, 908-439-2200, ext. 5327

Assistant Vice President

jennifer.marshall@ambest.com

or

Jim Peavy, 908-439-2200, ext. 5644

Assistant Vice President, Public Relations

james.peavy@ambest.com

Source: A.M. Best


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