A leading North Carolina property insurer has seen its credit rating downgraded due to a significant decrease in its underwriting revenue and its potential for large losses due to hurricanes and other severe weather conditions.
Standard & Poor’s rating agency announced it would reduce the credit rating and financial strengthen rating of the North Carolina Farm Bureau Mutual Insurance Co. from A to BBB.
The rating agency based its decision on two factors including a decline in the Raleigh, N.C.-based Farm Bureau’s operational profitability. In 2011, the insurer posted a $303 million underwriting loss. The rating agency also cited the insurer’s potential exposure to losses from hurricanes, hailstorms, tornadoes and other weather events.
The insurer provides coverage to farm and nonfarm property owners in all of the state’s 100 counties.
Standard & Poor’s did acknowledge that the insurer’s strong overall financial position partially offset the negative factors contributing to the rating downgrade. Along with an unrated subsidiary, Farm Bureau of North Carolina Inc., the Farm Bureau Group in 2010 reported earning $688 million in net premiums.