A.M. Best Maintains Under Review with Developing Implications Status on Ratings of John Deere Insurance Company

A.M. Best has maintained the under review with developing implications status of the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of John Deere Insurance Company (JDIC) (Johnston, IA). The developing implications continue to reflect the possibility that the ratings may change, although the direction of any ratings change is uncertain.

The action follows the recent announcement that JDIC has entered into a definitive agreement to be acquired by Farmers Mutual Hail Insurance Company of Iowa (FMH) (West Des Moines, IA), along with John Deere Risk Protection, Inc., JDIC’s affiliated managing general agent. The action follows the September 2014 announcement by Deere & Company (Deere) (Moline, IL) (NYSE:DE) that it will review strategic options for its crop business underwritten through its subsidiary, JDIC. At that time, JDIC’s ratings were placed under review with developing implications pending the outcome of the strategic review.

JDIC receives rating enhancement through its relationship with Deere. This enhancement reflects the operational and financial support of its parent. FMH management is currently reviewing the methods by which it will integrate JDIC under their revised operating and organizational structure. At the close of the planned transaction, A.M. Best will determine the appropriate level of rating enhancement, if any, to be provided to JDIC under the revised structure. If the transaction fails to close, A.M. Best will again evaluate the enhancement provided by Deere.

The ratings reflect JDIC’s strong capitalization, experienced management and the explicit support and benefits associated with being ultimately owned by Deere, a world leader in providing advanced products and services for agriculture, forestry, construction, lawn and turf care. Deere also provides financial services worldwide and manufactures and markets engines used in heavy equipment. Somewhat offsetting these positive rating factors is JDIC's poor operating performance recorded since operations came to scale in 2011. Such outcomes have been driven by start-up costs, including significant investments in precision farming technology, and to a larger degree, significant weather events and changes in commodity prices that have impacted results.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Property/Casualty Insurers
• Catastrophe Analysis in A.M. Best Ratings

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

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