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TMCNet:  A.M. Best Removes From Under Review Ratings of Farm Bureau Mutual of Arkansas, Inc.

[February 08, 2013]

A.M. Best Removes From Under Review Ratings of Farm Bureau Mutual of Arkansas, Inc.

OLDWICK, N.J. --(Business Wire)--

A.M. Best Co. has removed from under review with developing implications and affirmed the financial strength rating of B++ (Good) and issuer credit ratings of "bbb" of Farm Bureau Mutual Insurance Company of Arkansas, Inc. (Arkansas Farm Bureau) (Little Rock, AR). The outlook assigned to both ratings is stable.

The affirmation of the ratings reflects Arkansas Farm Bureau's improved operating performance as reflected in its solid underwriting and pre-tax operating profits along with its strong surplus growth; thus, boosting its risk-adjusted capitalization. The favorable results were driven by milder weather patterns and tighter underwriting and pricing standards. Underwriting initiatives have included rate adjustments, credit scoring, increased monitoring of wind exposure by county and rating class as well as physical inspections. While the company is well positioned at its current rating level, should the previous pattern of unfavorable performance trends return in 2013, it could result in renewed pressure on the company's ratings.

Arkansas Farm Bureau has been in the process of merging with three other mutual entities since early 2011: Colorado Farm Bureau Mutual Insurance Company, Louisiana Farm Bureau Mutual Insurance Company and South Carolina Farm Bureau Mutual Insurance Company.

While the merger is expected to result in an entity with a significantly greater premium and capital base, along with a wider geographic spread, the removal of the under review status on the ratings of Arkansas Farm Bureau are based on its current circumstances. The company's ratings are not expected to be significantly impacted by the completion of the merger process. Pending regulatory and policyholder approvals, the transaction is expected to be completed by year-end 2013.

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. Key criteria utilized include: "Understanding BCAR for Property/Casualty Insurers"; "Risk Management and the Rating Process for Insurance Companies"; and "Catastrophe Analysis in A.M. Best Ratings." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


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