A.M. Best has upgraded the financial strength rating to B (Fair) from B- (Fair) and the issuer credit rating to “bb+” from “bb-” for the members of the Oklahoma Farm Bureau Group: Oklahoma Farm Bureau Mutual Insurance Co. and its wholly owned subsidiary, AgSecurity Insurance Co., collectively referred to as Oklahoma Farm Bureau.
The outlook for the ratings has been revised to positive from stable. All companies are domiciled in Oklahoma City, Okla.
The upgrade of the ratings reflects Oklahoma Farm Bureau’s improved underwriting results and surplus appreciation. As a result, operating performance has been favorable, underwriting leverage ratios have improved and overall risk-adjusted capitalization has strengthened.
These results are due to significant risk management and exposure reduction initiatives implemented by management which have materialized favorably.
The positive outlook reflects A.M. Best’s opinion that favorable operating results and improvements in risk-adjusted capitalization will continue.
Offsetting rating factors include Oklahoma Farm Bureau’s historically volatile operating results and significant variation in overall risk-adjusted capitalization over the past five years. As a result, the group’s five-year average pre-tax and total returns on revenue and equity compare unfavorably to the private passenger standard auto and homeowners composite. Recent results have improved due to implemented risk management initiatives, exposure reduction and milder weather patterns.
While results have improved, volatility in prior year results still remains a concern. Recent underwriting gains and surplus growth have been somewhat diminished due to interest expense and repayment of some of the group’s surplus notes.
The group’s geographic concentration of risk as a single state writer in Oklahoma exposes it to frequent and severe weather-related events, as well as judicial, economic and legislative restrictions.