|[February 08, 2013]
A.M. Best Removes From Under Review the Ratings of Colorado Farm Bureau Mutual Insurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has removed from under review with negative
implications and downgraded the issuer credit rating (ICR) to "bbb" from
"bbb+" of Colorado Farm Bureau Mutual Insurance Company (Colorado
Farm Bureau) (Centennial, CO). A.M. Best also has affirmed the financial
strength rating (FSR) of B++ (Good) of Colorado Farm Bureau. The outlook
assigned to both ratings is stable.
The affirmation of Colorado Farm Bureau's FSR reflects its favorable
risk-adjusted capitalization, which is somewhat offset by its
unfavorable operating performance trend due to weather-related losses in
recent years. In 2012, Colorado Farm Bureau's underwriting results were
negatively impacted by significant wildfire and tornado/hail events.
These events, coupled with a moderate reduction in Colorado Farm
Bureau's surplus position, were the main drivers in the downgrading of
its ICR. However, the company's net underwriting leverage remains
moderate, and its risk-adjusted capitalization is still well supportive
of its current rating level. If this negative operating and
capitalization trend were to ontinue in 2013, it may place additional
pressure on the current ratings.
Colorado Farm Bureau has been in the process of merging with three other
farm bureau mutual entities since early 2011: Farm Bureau Mutual
Insurance Company of Arkansas, Inc., Louisiana Farm Bureau Mutual
Insurance Company and South Carolina Farm Bureau Mutual Insurance
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 of Colorado Farm Bureau is due to
its current circumstances. The company's ratings are not expected to be
significantly impacted by the completion of the merger process itself.
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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