CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - FEBRUARY 09, 2010 12:00 AM (EST)
A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B+ (Good) and issuer credit ratings to "bb" 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 remain under review with negative implications.
The group's ratings were downgraded previously following poor underwriting results in 2008 and the first half of 2009. (Please see press releases dated May 18 and August 21, 2009.)
The latest rating actions reflect Oklahoma Farm Bureau Group's continuing negative underwriting performance and its weakened risk-adjusted capitalization, which no longer supports the previous ratings. The group has posted approximately $65 million in net underwriting losses through the first nine months of 2009, which was preceded by $64 million of net underwriting losses in full-year 2008, due primarily to frequent and severe weather-related events that mostly impacted its homeowners' book of business. Together, these events have led to a significant decline in policyholders' surplus since year-end 2007, which has resulted in significantly reduced risk-adjusted capitalization.
While the group continues efforts to bolster its surplus levels, reduce its highly elevated underwriting leverage ratio and improve its risk-adjusted capitalization measures, the ratings will remain under review with negative implications due to uncertainties associated with these initiatives.
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.