Posted 5/14/2012 02:50 pm
Updated 3 years ago
A.M. Best Co. of Oldwick, N.J., has downgraded the Little Rock Farm Bureau's financial strength rating to B++, which is considered good, from A-, which is considered excellent, according to an A.M. Best news release issued Friday. Arkansas Farm Bureau's issuer credit rating also fell to bbb down from a-.
The downgrades were caused by the company's "heavy weather-related losses in recent years, which has resulted in a steady erosion of its surplus levels," the news release said. "The company has posted its fourth straight year of underwriting losses and accompanying unfavorable combined ratios. Should these unfavorable trends continue in 2012, additional pressure could be placed on the company's ratings."
Farm Bureau wouldn't release how much it had in losses in 2011, said Steve Eddington, a spokesman for the Arkansas Farm Bureau.
In the meantime, Farm Bureau Mutual Insurance, which is one of Arkansas Business' largest private companies, is merging with Colorado Farm Bureau Mutual Insurance Co., Louisiana Farm Bureau Mutual Insurance Co., and South Carolina Farm Bureau Mutual Insurance Co.
Eddington said that deal has been in the works for several months and he didn't know when it might be completed. But it needs to be approved by several of state insurance commissioners.
He also said that he didn't know how the companies would be structured after the merger is completed.
He said the merger is being done for "spread of risk, which is what the insurance business is all about.
In 2011, Arkansas Farm Bureau's revenue was up 7.4 percent to $181.6 million.