A.M. Best Co. said it will downgrade the financial strength rating and the issuer credit rating of Oklahoma City-based American Farmers & Ranchers Mutual Insurance Company. The rating agency cited concerns about the company's future capital position.
American Farmers & Ranchers Mutual Insurance Company's FSR was lowered to "B-plus" from "B-double-plus," and its issuer credit rating was lowered to "triple-b-minus" from "triple-b." The ratings were placed under review with negative implications, A.M. Best said.
A.M. Best has also assigned a "B-plus" financial strength rating and "triple-b-minus" issuer credit rating to American Farmers & Ranchers Group and American Farmers & Ranchers Insurance Company, which is a recently acquired American Farmers & Ranchers Mutual Insurance Company. These ratings were also placed under review with negative implications.
The rating agency said that its actions "reflect the group's weakened capital position from prior years as a result of costs associated with internal system improvements and the subsequent increase in the group's nonadmitted assets, as well as severe storm activity that occurred in late 2007 and early 2008 in its operating territory."
These factors are partially offset by the group's level of capital, established agency relationships, conservative investment portfolio, and "a comprehensive reinsurance program that mitigates the potential losses from the group's significant catastrophe exposures."
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