A.M. Best Revises Outlook of Issuer Credit Rating for Louisiana Farm Bureau Mutual Insurance Company
OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the issuer credit rating (ICR) outlook to positive from stable and affirmed the financial strength rating (FSR) of B++ (Good) and ICR of “bbb” of Louisiana Farm Bureau Mutual Insurance Company (Louisiana Farm Bureau) (Baton Rouge, LA). The outlook for the FSR is stable.
Louisiana Farm Bureau’s ratings reflect its solid risk-adjusted capitalization and favorable underwriting and operating performance in recent years, as it has benefited from milder weather patterns as well as improved underwriting earnings from re-underwriting initiatives, including rate adjustments, and increased monitoring and management of risk exposures along both coastal and inland areas.
While the company is well positioned at its current rating level, a continuation of these favorable operating trends could result in further positive rating actions. Conversely, as a property writer in a single state with coastal exposures, it remains susceptible to severe weather events that could potentially adversely impact its operating results and surplus position, thereby placing negative pressure on the ratings.
Louisiana Farm Bureau has been in the process of merging with three other mutual entities since 2011: Farm Bureau Mutual Insurance Company of Arkansas, Inc., Colorado Farm Bureau Mutual Insurance Company and South Carolina Farm Bureau Mutual Insurance Company.
While the mergers are expected to result in an entity with a significantly greater premium and capital base, along with a wider geographic spread, the ratings of Louisiana Farm Bureau are based on its current circumstances. Louisiana Farm Bureau’s ratings are not expected to be significantly impacted by the completion of the merger process. Pending regulatory and policyholder approvals, the transaction is expected to be completed in 2015.
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.
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