A.M. Best Downgrades Ratings of Farmers Mutual Fire Insurance Company of Branch County
2009-05-29 21:13:01 -
A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B+ (Good) and issuer credit rating to “bb” from “bbb-” of Farmers Mutual Fire Insurance Company of Branch County (Farmers Branch) (Coldwater, MI). The outlook for both ratings is negative.
These rating actions reflect Farmers Branch’s long-term trend of poor operating results and recent surplus deterioration. Earnings have been strained by unprofitable underwriting results, which occurred over several years due to frequent weather-related events and large fire-related losses. Additionally, Farmers Branch maintains an elevated expense position that continues to hinder profitability. Furthermore, in 2008, surplus was negatively affected by dislocations in the financial markets, as the company’s equity investment leverage remains elevated.
As a single state property writer in Michigan, operating results will remain vulnerable to severe weather-related events, competitive, regulatory and financial market conditions. The rating outlook is based on Farmers Branch’s decline in risk-adjusted capitalization following several years of underwriting losses and recent dislocations in the financial markets.
Offsetting the negative rating factors is Farmers Branch’s modest premium volume in relation to its surplus as evidenced by premium and net leverage ratios, which remained at a low level over the past five years. Moreover, A.M. Best recognizes the company’s presence as a niche writer in Michigan for over 140 years.
For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .
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. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .
A.M. Best Co.Analysts:Adrienne Tortoriello,
908-439-2200, ext. 5088 adrienne.tortoriello@ambest.com : mailto:adrienne.tortoriello@ambest.com orRick
Decker, 908-439-2200, ext. 5423 rick.decker@ambest.com : mailto:rick.decker@ambest.com orPublic
Relations:Jim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com : mailto:james.peavy@ambest.com orRachelle
Morrow, 908-439-2200, ext. 5378 rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com
