A.M. Best Revises Outlook to Stable for Georgia Farm Bureau Group Members
The affirmation reflects GFB’s risk-adjusted capitalization, which adequately supports its rating level. The company also benefits from the sponsorship of the
Partially offsetting these positive rating factors is GFB’s generally unfavorable operating performance, as reflected by its volatile operating and underwriting results in four of the past five years. As a result, its five-year average pre-tax returns on revenue and surplus are negative and compare unfavorably with the private passenger standard auto and homeowners composites. GFB’s unfavorable underwriting and operating performance during the latest five-year period is attributed primarily to frequent and severe weather events that have periodically fallen below the company’s catastrophe retention. Furthermore, GFB’s business concentration in
However, the revision of the outlook to stable from negative reflects GFB’s steadily improving trend of underwriting performance, with the company posting a modest underwriting profit in 2014. Underwriting results have been positive in six of the preceding eight quarters while improving risk-adjusted capitalization levels. Further, GFB has a strong reinsurance program, retains excellent liquidity measures and has had a long-standing local market presence.
Factors that could result in negative rating actions include a return to unfavorable underwriting performance and/or a significant erosion of its capital base. Conversely, a sustained improvement in operating results, along with maintenance of favorable risk-adjusted capitalization, could lead to an upward revision in its rating outlook.
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized include:
- Understanding BCAR for Property/Casualty Insurers
- Risk Management and the Rating Process for Insurance Companies
- Catastrophe Analysis in A.M. Best Ratings
- Rating Members of Insurance Groups
- Evaluating U.S. Surplus Notes
This press release relates to rating(s) that have been published on
Copyright © 2015 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.
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