A.M. Best Revises Outlooks to Negative for Georgia Farm Bureau Group Members
A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of B+ (Good) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “bbb-” of Georgia Farm Bureau Mutual Insurance Co. (GFBMIC ) and Georgia Farm Bureau Casualty Insurance Co., collectively referred to as the Georgia Farm Bureau Group, domiciled in Macon, Ga.
GFBMIC is Georgia’s largest domiciled personal lines insurer and is the predominant farm insurance carrier in the state. Affiliated with Georgia Farm Bureau, GFBMIC supports Georgia agriculture, Georgia’s largest industry.
According to a statement from the ratings agency, the negative outlooks reflect Georgia Farm Bureau’s decline in overall risk-adjusted capitalization, continued adverse operating results in 2017, increase in financial leverage and elevated exposure to the equity markets. The negative outlooks further consider the challenging investment climate for equities and fixed income, characterized by peak, yet volatile stock prices and low bond yields.
The group’s geographic concentration exposes it to regulatory and legislative actions that may have a material impact on its business strategies.
Prospectively, A.M. Best said the company’s ongoing initiatives to “improve performance include enhanced reinsurance coverage, additional support to the company’s capital structure via surplus notes, efforts to improve reserving adequacy and expansion of the company’s senior management team.”
GFBMIC spokesperson Andy Lucas said in a statement the company anticipated the outlook revisions after its 2016 results.
“Hurricane Matthew and the ongoing automobile insurance industry claims crisis both had significant short term impacts on GFBMIC’s 2016 financial performance,” Lucas said. “GFBMIC has already initiated significant strategic and short term initiatives to manage future impacts, regain profitability and improve ratings and outlook in the future. We are confident that both our financial results and subsequent A.M. Best indications will see improvement.”