OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best has revised the outlook for the issuer credit ratings
(ICR) to stable from negative and affirmed the financial strength rating
(FSR) of A (Excellent) and the ICRs of ďa+Ē for the North Carolina
Farm Bureau Group (North Carolina Farm Bureau) members, North
Carolina Farm Bureau Mutual Insurance Company and Farm Bureau
Insurance Company of N.C., Inc. The outlook for the FSR is stable.
All companies are domiciled in Raleigh, NC.
The rating affirmations reflect North Carolina Farm Bureauís solid
risk-adjusted capitalization and historically favorable operating
earnings. The ratings also recognize the groupís strong risk management
practices and market leadership position as an insurer of farm-related
exposures in North Carolina. These positive rating factors are
reflective of managementís disciplined underwriting approach and
conservative investment strategy.
North Carolina Farm Bureauís ongoing risk management initiatives are
reflected in its ratings and are designed to reduce catastrophe exposure
and drive more consistent underwriting performance. Furthermore, North
Carolina Farm Bureau maintains a cost-effective agency network, a
long-standing local market presence, as well as derives benefits from
the sponsorship provided by the North Carolina Farm Bureau Federation,
which facilitates marketing and government relations efforts as well as
enhances customer loyalty and affinity.
Partially offsetting these positive rating factors are North Carolina
Farm Bureauís geographic concentration of risk, which exposes it to
weather-related events, as well as risks from changes in the economic,
judicial and regulatory environments. The groupís exposure to
weather-related events was evident in 2011 when above-average claims
caused by wind, hail, tornadoes and Hurricane Irene resulted in a
significant underwriting loss and a surplus decline of over 20%. Prior
to 2011, North Carolina Farm Bureauís underwriting performance had been
better than the composite average.
The revision of the ICRs outlook to stable reflects North Carolina Farm
Bureauís stronger surplus position and improved risk-adjusted
capitalization and operating performance in 2012 and in 2013. While this
is partly due to relatively milder weather patterns during this period,
it also reflects North Carolina Farm Bureauís emphasis on reducing
underwriting losses through enhanced pricing and better risk selection.
The outlook further considers North Carolina Farm Bureauís efforts in
recent years to mitigate its exposure to catastrophic weather related
losses through a steady reduction in risk exposures in coastal and/or
concentrated areas and through additional reinsurance protection.
Factors that could result in negative rating actions include a renewed
deterioration in North Carolina Farm Bureauís operating performance
and/or erosion of its capital base. Factors that could result in further
improvement in the ratings and/or a positive outlook are continued
sustained improvement in the groupís underwriting and operating
performance while maintaining strong risk-adjusted capitalization.
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
Neil Das Gupta, 908-439-2200, ext. 5206
Assistant Vice President, 908-439-2200, ext. 5125
Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public
Source: A.M. Best