OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has downgraded the financial strength rating to B++
(Good) from A- (Excellent) and issuer credit rating to “bbb” from “a-”
of Farm Bureau Mutual Insurance Company of Arkansas, Inc. (Arkansas
Farm Bureau) (Little Rock, AR). The ratings remain under review with the
implications revised to developing from negative.
The rating downgrades reflect Arkansas Farm Bureau’s deteriorating
stand-alone operating performance characterized by heavy weather-related
losses in recent years, which has resulted in a steady erosion of its
surplus levels. The company has posted its fourth straight year of
underwriting losses and accompanying unfavorable combined ratios. Should
these unfavorable trends continue in 2012, additional pressure could be
placed on the company’s ratings.
Arkansas Farm Bureau is currently in the process of merging with three
other mutual entities: Colorado Farm Bureau Mutual Insurance Company,
LouisianaFarm Bureau Mutual Insurance Company and South
Carolina Farm Bureau Mutual Insurance Company.
The merger is expected to result in an entity with a significantly
greater premium and capital base, along with a wider geographic spread.
Thus, the under review status of Arkansas Farm Bureau reflects the
potential for changes in its risk-adjusted capitalization along with its
business and risk profile. A.M. Best plans to resolve the under review
status upon completion of the transaction. Pending regulatory and
policyholder approvals, the transaction is expected to be completed by
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 © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.Neil Das Gupta, 908-439-2200, ext. 5206Financial
A. Burtone, 908-439-2200, ext. 5125Assistant Vice Presidentjoseph.email@example.comRachelle
Morrow, 908-439-2200, ext. 5378Senior Manager, Public
Peavy, 908-439-2200, ext. 5644Assistant Vice President,
Source: A.M. Best Co.