A.M. Best Withdraws Ratings of Farmers Union Mutual Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B+ (Good) and issuer credit rating to “bb” from “bbb-” for Farmers Union Mutual Insurance Company (Farmers Union) (Bryant, AR). The outlook for both ratings is negative. Concurrently, A.M. Best has withdrawn the ratings and assigned an NR-4 to the FSR and an “nr” to the ICR. These withdrawals are in response to management’s request to be removed from A.M. Best’s interactive rating process.

Farmers Union’s rating downgrades are due in part to its persistent underwriting losses over the last four years, which totaled $6.7 million. In 2008 and 2009, Farmers Union experienced frequent and severe storm losses from wind, hail and tornadoes, along with a surplus loss of 35.5% and 31.6%, respectively.

Although Farmers Union has implemented corrective actions and entered into a 25% quota share reinsurance agreement to improve net premium leverage, A.M. Best remains concerned with Farmers Union’s poor operating performance and ability to generate surplus growth.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best
Analysts
Frederick DeLeon, 908-439-2200, ext. 5175
[email protected]
or
Gary Davis, 908-439-2200, ext. 5665
[email protected]
or
Public Relations
Rachelle Morrow, 908-439-2200, ext. 5378
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
[email protected]

Source: A.M. Best Co.