News Column

A.M. Best Revises Outlook for Ratings of Colorado Farm Bureau Mutual Insurance Company

February 21, 2014



OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of ďbbbĒ of Colorado Farm Bureau Mutual Insurance Company(Colorado Farm Bureau) (Centennial, CO).

The affirmation of Colorado Farm Bureauís ratings reflects its supportive risk-adjusted capitalization, which is somewhat offset by its unfavorable operating performance trend due primarily to weather-related losses in recent years as underwriting results were negatively impacted by significant wildfire and tornado/hail events. These events, coupled with the continued reduction in Colorado Farm Bureauís surplus position, are the main drivers in revising the outlook to negative from stable. However, the companyís net underwriting leverage remains moderate, and its risk-adjusted capitalization is still supportive of its current rating level. However, were these negative operating and capitalization trends to continue in 2014, it may result in the ratings being downgraded.

Colorado Farm Bureau has been in the process of merging with three other farm bureau mutual entities since 2011: Farm Bureau Mutual Insurance Company of Arkansas, Inc., LouisianaFarm Bureau Mutual Insurance Company andSouth 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 Colorado Farm Bureau are due to its current circumstances. While the potential does exist for Colorado Farm Bureauís ratings to be downgraded based on its financial performance as reflected by the negative outlook, its 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 Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.





A.M. Best

Neil Das Gupta

Financial Analyst

(908) 439-2200, ext. 5206

neil.dasgupta@ambest.com

or

Joseph A. Burtone

Assistant Vice President

(908) 439-2200, ext. 5125

joseph.burtone@ambest.com

or

Rachelle Morrow

Senior Manager, Public Relations

(908) 439-2200, ext. 5378

rachelle.morrow@ambest.com

or

Jim Peavy

Assistant Vice President, Public Relations

(908) 439-2200, ext. 5644

james.peavy@ambest.com



Source: A.M. Best


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