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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 18, 2009 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating to B++ (Good) from A- (Excellent) and issuer credit ratings to "bbb+" from "a-" of Georgia Farm Bureau Group (Macon, GA) and its members, Georgia Farm Bureau Mutual Insurance Company and Georgia Farm Bureau Casualty Insurance Company. The outlook for all ratings has been revised to stable from negative.
The rating downgrades reflect Georgia Farm Bureau Group's continuing unfavorable underwriting performance, which has negatively impacted the group's capitalization. The group posted a nearly $80 million underwriting loss in 2008, which was the primary driver behind a drop in surplus of approximately $70 million or 19%. Though the group had bolstered its capital position at year-end 2007 through the issuance of $45 million in surplus notes, this capital cushion has been depleted due to the poor operating results of 2008 and first quarter 2009.
The personal auto liability and homeowners' segment, which is part of the group's core book of business, continues to significantly underperform relative to its industry peers. Furthermore, as a single state property writer, Georgia Farm Bureau Group's overall earnings are exposed to frequent and severe weather-related events.
The outlook reflects the group's present capital position, which adequately supports the current ratings. The group has initiated efforts to re-underwrite its core book of business to achieve future underwriting profitability.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating 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.