OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A (Excellent) and affirmed the issuer credit ratings of “a+” of North
Carolina Farm Bureau Group(North Carolina Farm Bureau) and its
members, North Carolina Farm Bureau Mutual Insurance Companyand Farm
Bureau Insurance Company of North Carolina, Inc. The outlook for the
ICRs has been revised to negative from stable, while the outlook for the
FSR is stable. All companies are domiciled in Raleigh, NC.
The rating affirmations reflect North Carolina Farm Bureau’s solid
risk-adjusted capitalization and historically favorable operating
earnings. The ratings also recognize the group’s strong risk management
practices and market leadership position as an insurer of farm-related
business in North Carolina. These positive rating factors are reflective
of management’s disciplined underwriting approach and conservative
North Carolina Farm Bureau’s ongoing risk management initiatives are
reflected in its ratings and are designed to reduce catastrophe exposure
and drive more consistent underwriting performance. Furthermore, North
Carolina Farm Bureau maintains a cost-effective employee agency network,
a long-standing local market presence, as well as derives benefits from
the sponsorship provided by the North Carolina Farm Bureau Federation,
which facilitates marketing and government relations efforts and
enhances customer loyalty and affinity.
Partially offsetting these positive rating factors are North Carolina
Farm Bureau’s geographic concentration of risk, which exposes it to
weather-related events, as well as risks from changes in the economic,
judicial and regulatory environment. The group’s exposure to
weather-related events was evident in 2011 when above average claims
caused by wind, hail, tornadoes and Hurricane Irene resulted in a
significant underwriting loss and a surplus decline of approximately
23%. Prior to 2011, North Carolina Farm Bureau’s underwriting
performance had been better than the composite average.
The negative outlook assigned to the ICR reflects North Carolina Farm
Bureau’s reduced surplus, weakened risk-adjusted capitalization and
increased dependence on reinsurance over the near term. The outlook
further considers the current volatile economic conditions that may have
a material effect on the group’s net investment income and reinsurance
costs, which have the potential to put additional pressure on North
Carolina Farm Bureau’s pre-tax operating returns.
Factors that could result in future negative rating actions include a
continued deterioration in North Carolina Farm Bureau’s underwriting
performance or additional erosion of its capital base. A key rating
trigger that could result in the removal of the negative outlook is an
improvement in the group’s underwriting performance over the mid term
while maintaining strong risk-adjusted capitalization.
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: “Risk
Management and the Rating Process for Insurance Companies”;
“Understanding BCAR for Property/Casualty Insurers”; “Rating Members of
Insurance Groups”; 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 © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
A.M. Best Co.Frederick DeLeonSenior
Financial Analyst(908) 439-2200, ext. email@example.comRick
DeckerAssistant Vice President(908) 439-2200,
MorrowSenior Manager, Public Relations(908)
439-2200, ext. firstname.lastname@example.orgJim
PeavyAssistant Vice President, Public Relations(908)
439-2200, ext. email@example.com
Source: A.M. Best Co.