Please replace the release with the following corrected version, due to a revised fifth paragraph.
The corrected release reads:
The ratings and revised outlook reflect Farmers’ trend in above average operating results driven by its management’s disciplined underwriting practices, generally conservative operating fundamentals and extensive local market knowledge, which has been evident over several years. Farmers’ favorable earnings have been attributed to strong underwriting results complemented by a steady stream of investment income. The outlook further recognizes the expectation that the company’s operating performance and capitalization will continue to benefit from management’s judicious risk management practices, underwriting discipline, prudent reinsurance program and conservative investment strategy.
The ratings further acknowledge Farmers’ solid risk-adjusted capitalization and strong pretax operating returns over the past several years, which have consistently outperformed the personal property composite average. The company’s capital position is derived from below average underwriting leverage and consistent generation of capital from profitable underwriting results combined with its conservative investment portfolio.
As a property predominant writer with a geographic concentration in West Virginia, Farmers’ earnings remain susceptible to localized and severe weather-related events, as well as changes in the regulatory and competitive environments. Underwriting profitability remains a key objective of management, who remains focused on adequate pricing, an aggressive inspection program as part of its exposure management process and technology enhancements.
Future positive rating actions may occur following continued strong underwriting and operating performance by Farmers, while maintaining strong capitalization. However, negative rating actions could result if the company’s operating performance were to fall materially short of its expectations or if there is a considerable deterioration in its risk-adjusted capitalization.