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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 29, 2012 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating to B+ (Good) from B++ (Good) and issuer credit ratings to “bbb-” from “bbb” of Georgia Farm Bureau Group (Georgia Farm Bureau) (Macon, GA) and its members, Georgia Farm Bureau Mutual Insurance Company and Georgia Farm Bureau Casualty Insurance Company. The outlook for all ratings is negative.
The rating downgrades reflect Georgia Farm Bureau’s trend of underwriting losses over several years and its significant decline in surplus. Georgia Farm Bureau’s poor underwriting performance is attributed to frequent and severe weather losses over the previous five years in Georgia, where it writes primarily personal lines business. In addition, the group’s limited marketing territory exposes it to regulatory and legislative actions that may have a material impact on its business strategies.
The negative outlook reflects Georgia Farm Bureau’s reduced surplus, decline in risk-adjusted capitalization and ability to improve the organization’s underwriting performance over the near term. The outlook further considers the current volatile economic conditions that may have a material effect on the group’s net investment income and pre-tax operating returns.
While Georgia Farm Bureau’s risk-adjusted capitalization continues to support its current ratings, the company’s ongoing initiatives are reflected in the ratings and designed to improve underwriting performance. Georgia Farm Bureau maintains a cost effective employee agency network, a long-standing local market presence as well as derives benefits from the sponsorship provided by the Georgia Farm Bureau Federations, which facilitate marketing and government relations efforts and enhances customer loyalty and affinity.
Factors that could result in future negative rating actions include a continued deterioration in Georgia Farm Bureau’s underwriting performance or continued erosion of its capital base.
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: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “A.M. Best Ratings & the Treatment of Debt”; “Equity Credit for Hybrid Securities”; and “Catastrophe Analysis in A.M. Best Ratings.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.