A.M. Best Affirms Ratings of Colorado Farm Bureau Mutual Insurance Company [Manufacturing Close – Up]

A.M. Best Co. has affirmed the financial strength rating of B++ (Good) and issuer credit rating of "bbb+" of Colorado Farm Bureau Mutual Insurance Company (Colorado Farm Bureau) (Centennial, CO).

The ratings remain under review, and the implications have been revised to negative from developing.

Colorado Farm Bureau's ratings reflect its favorable risk- adjusted capitalization, which is somewhat offset by its unfavorable operating performance trend due to weather-related losses in recent years. If this negative trend were to continue in 2012, it may place additional pressure on the current ratings.

Colorado Farm Bureau is currently in the process of merging with three other farm bureau mutual entities: Farm Bureau Mutual Insurance Company of Arkansas, Inc., Louisiana 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, the under review status of Colorado Farm Bureau also reflects the potential that its ratings as a merged entity may be the same or lower than its current ratings.

A.M. Best plans to resolve the under review status upon the completion of the transaction. Pending regulatory and policyholder approvals, the transaction is expected to be completed by year-end 2012.

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"; Best's Credit Rating Methodology can be found at ambest.com/ratings/ methodology.

A.M. Best Company is an insurance rating and information source.

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