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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 Oklahoma Farm Bureau Group (Oklahoma City, OK) and its members, Oklahoma Farm Bureau Mutual Insurance Company and AgSecurity Insurance Company. The outlook for all ratings is stable.
The rating downgrades reflect Oklahoma Farm Bureau Group's poor underwriting performance in 2008 and first quarter 2009, which has negatively impacted the group's risk-adjusted capitalization. The group posted a nearly $65 million net underwriting loss in 2008 due primarily to frequent and severe weather-related events. Although this significant impact to policyholders' surplus was partially offset by the issuance of a $15.8 million surplus note at year-end 2008, the decline in surplus of nearly $40 million in 2008 or approximately 27% has resulted in significantly reduced risk-adjusted capitalization.
The personal auto and homeowners/farmowners' segment, which represents the group's core book of business, has underperformed relative to its industry peers. Furthermore, as a single state property writer, Oklahoma Farm Bureau Group's overall earnings remain exposed to frequent and severe weather-related events.
The outlook reflects the group's current risk-adjusted capitalization, which remains adequate for its current rating level.
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.