|[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
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