AM Best

A.M. Best Downgrades Ratings of Oklahoma Farm Bureau Group and Its Members; Places Ratings Under Review

Neil Das Gupta
(908) 439-2200, ext. 5206

Gary Davis
(908) 439-2200, ext. 5665

Public Relations
Jim Peavy
(908) 439-2200, ext. 5644

Rachelle Morrow
(908) 439-2200, ext. 5378


OLDWICK, N.J. - AUGUST 21, 2009 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 Oklahoma Farm Bureau Group and its members, Oklahoma Farm Bureau Mutual Insurance Company and AgSecurity Insurance Company (all located in Oklahoma City, OK). The ratings have been placed under review with negative implications.

The group's ratings were downgraded previously following poor underwriting results in 2008 and first quarter 2009. (Please see press release dated May 18, 2009.) The latest rating actions reflect Oklahoma Farm Bureau Group's continuing significant negative underwriting performance in second quarter 2009, which has resulted in substantial further weakening of the group's risk-adjusted capitalization. The group has posted approximately $45 million in net underwriting losses in the first half of 2009, which was preceded by a nearly $65 million net underwriting loss in 2008, due primarily to frequent and severe weather-related events that primarily impacted its homeowners' book of business. Together, these events have led to a decline in policyholder's surplus of over $80 million or 55% of surplus since year-end 2007, which has resulted in significantly reduced risk-adjusted capitalization.

The ratings will remain under review pending efforts undertaken by the group to bolster its surplus levels, reduce its highly elevated underwriting leverage ratio and improve its risk-adjusted capitalization measures.

If the Oklahoma Farm Bureau Group is unable to successfully implement these steps, there is a strong likelihood that its ratings will be further downgraded.

While the Oklahoma Farm Bureau Group does continue to have a strong local market presence and retains access to capital by virtue of its association with the Farm Bureau insurance companies across the United States, the group's overall earnings remain exposed to frequent and severe weather-related events, as a single state property writer.

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.

Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.