|[February 08, 2013]
A.M. Best Removes From Under Review and Upgrades Ratings of Louisiana Farm Bureau Mutual Insurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has removed from under review with positive
implications and upgraded the financial strength rating to B++ (Good)
from B+ (Good) and issuer credit rating to "bbb" from "bbb-" of Louisiana
Farm Bureau Mutual Insurance Company (Louisiana Farm Bureau) (Baton
Rouge, LA). The outlook assigned to both ratings is stable.
Louisiana Farm Bureau's ratings reflect its solid risk-adjusted
capitalization and favorable underwriting and operating performance in
recent years, as it has benefited from milder weather patterns as well
as improved underwriting earnings from re-underwriting initiatives,
including rate adjustments, and increased monitoring and management of
risk exposures along both coastal and inland areas. While the company is
well positioned at its current rating level, as a property writer in a
single state with coastal exposures, it remains susceptible to severe
weather events that could adversely impact its operating results and
surplus position, thereby placing negative pressure on the ratings.
Louisiana Farm Burau has been in the process of merging with three
other mutual entities since early 2011: Farm Bureau Mutual Insurance
Company of Arkansas, Inc., Colorado 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 of Louisiana Farm Bureau is based
on its current circumstances. Louisiana Farm Bureau'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"; "Catastrophe Analysis
in A.M. Best Ratings"; and "Equity Credit for Hybrid Securities." 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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