A.M. Best Co. said it will downgrade the financial strengthrating and the issuer credit rating of Oklahoma City-based AmericanFarmers & Ranchers Mutual Insurance Company. The rating agencycited concerns about the company's future capital position.

American Farmers & Ranchers Mutual Insurance Company's FSRwas lowered to "B-plus" from "B-double-plus," and its issuer creditrating was lowered to "triple-b-minus" from "triple-b." The ratingswere placed under review with negative implications, A.M. Bestsaid.

A.M. Best has also assigned a "B-plus" financial strength ratingand "triple-b-minus" issuer credit rating to American Farmers &Ranchers Group and American Farmers & Ranchers InsuranceCompany, which is a recently acquired American Farmers &Ranchers Mutual Insurance Company. These ratings were also placedunder review with negative implications.

The rating agency said that its actions "reflect the group'sweakened capital position from prior years as a result of costsassociated with internal system improvements and the subsequentincrease in the group's nonadmitted assets, as well as severe stormactivity that occurred in late 2007 and early 2008 in its operatingterritory."

These factors are partially offset by the group's level ofcapital, established agency relationships, conservative investmentportfolio, and "a comprehensive reinsurance program that mitigatesthe potential losses from the group's significant catastropheexposures."