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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 09, 2009 12:00 AM (EDT)
A.M. Best Co. has assigned a financial strength rating (FSR) of A (Excellent) and an issuer credit rating (ICR) of "a" to Texas Farm Bureau Casualty Insurance Company (Texas Casualty). The outlook assigned to these ratings is stable.
Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of "a-" of Farm Bureau County Mutual Insurance Company of Texas (County Mutual). These ratings remain under review with revised implications to positive from developing. All companies are domiciled in Waco, TX.
Texas Casualty's ratings reflect its excellent risk-adjusted capitalization, local market knowledge and strong market presence as one of the leading personal lines insurance organizations in Texas. The ratings also reflect management's conservative operating philosophy and disciplined underwriting guidelines. In addition, Texas Casualty maintains a sustainable competitive advantage due to its exclusive agency network, local market knowledge and low cost structure. The ratings also acknowledge the benefits from its sponsorship by the Texas Farm Bureau Organization, which enhances its customer loyalty and affinity.
These positive rating attributes are partially offset by Texas Casualty's business concentration in a single state with catastrophe exposure. Although business is diversified throughout Texas, operating in a single state exposes earnings to competitive pressures and regulatory concerns. In addition, there is modest catastrophe exposure from assumed quota share and loss ratio reinsurance treaties.
County Mutual's ratings were placed under review with developing implications on February 4, 2009, as a result of moving its 100% quota share reinsurance agreement from Southern Farm Bureau Casualty Insurance Company (Southern) (Ridgeland, MS) to Texas Casualty. Since Texas Casualty was not rated at that time, the ratings were placed under review. The ratings will remain under review until a revised reinsurance agreement is finalized between County Mutual and Texas Casualty as well as a capital contribution. The positive implication was assigned to reflect the higher rating of Texas Casualty.
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.