CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK - APRIL 21, 2015 02:11 PM (EDT)
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Georgia Farm Bureau Mutual Insurance Company and Georgia Farm Bureau Casualty Insurance Company, collectively referred to as the Georgia Farm Bureau Group (GFB). All companies are domiciled in Macon, GA.
The affirmation reflects GFB's risk-adjusted capitalization, which adequately supports its rating level. The company also benefits from the sponsorship of the Georgia Farm Bureau Federation, which facilitates marketing efforts and enhances customer loyalty and affinity. Additionally, management has been undertaking initiatives to restore operational profitability, including rate increases where needed, reducing concentrated exposures and re-underwriting its book of business through data analytics, thereby leading to better risk selection.
Partially offsetting these positive rating factors is GFB's generally unfavorable operating performance, as reflected by its volatile operating and underwriting results in four of the past five years. As a result, its five-year average pre-tax returns on revenue and surplus are negative and compare unfavorably with the private passenger standard auto and homeowners composites. GFB's unfavorable underwriting and operating performance during the latest five-year period is attributed primarily to frequent and severe weather events that have periodically fallen below the company's catastrophe retention. Furthermore, GFB's business concentration in Georgia exposes it to regulatory and legislative changes in a single state.
However, the revision of the outlook to stable from negative reflects GFB's steadily improving trend of underwriting performance, with the company posting a modest underwriting profit in 2014. Underwriting results have been positive in six of the preceding eight quarters while improving risk-adjusted capitalization levels. Further, GFB has a strong reinsurance program, retains excellent liquidity measures and has had a long-standing local market presence.
Factors that could result in negative rating actions include a return to unfavorable underwriting performance and/or a significant erosion of its capital base. Conversely, a sustained improvement in operating results, along with maintenance of favorable risk-adjusted capitalization, could lead to an upward revision in its rating outlook.
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. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized include:
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.