A.M. Best Revises Outlook of Issuer Credit Rating for Farm Bureau Mutual of Arkansas, Inc.
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 Farm Bureau Mutual Insurance Company of Arkansas, Inc. (Arkansas Farm Bureau) (Little Rock, AR). The outlook for the FSR is stable.
The positive ICR outlook reflects Arkansas Farm Bureau’s significantly improved operating performance in 2013, as reflected in its solid underwriting and pre-tax operating profits, along with its strong surplus growth, which has boosted its overall risk-adjusted capitalization. The favorable results were driven by milder weather patterns and tighter underwriting standards. Underwriting initiatives have included rate adjustments, credit scoring, increased monitoring of wind exposure by county and rating class as well as physical inspections.
While the company is well positioned at its current rating level, a continuation of current favorable trends could result in further positive rating actions. Conversely, should the previous pattern of unfavorable performance trends return in 2014, it could result in rating pressure.
Arkansas Farm Bureau has been in the process of merging with three other mutual entities since 2011: Colorado Farm Bureau Mutual Insurance Company, Louisiana 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 Arkansas Farm Bureau are based on its current circumstances. The company’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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