A.M. Best Affirms Rating of Florida Farm Bureau Group.OLDWICK, N.J. -- A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A (Excellent) of the Florida Farm Bureau Group. The rating applies to Florida Farm Bureau Casualty Insurance Company and its fully reinsured subsidiary, Florida Farm Bureau General Insurance Company. All companies are located in Gainesville, FL. The rating outlook is stable. The rating reflects the Group's strong capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , solid operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before , pro-active risk management philosophy and its knowledge of the Florida marketplace. These positive rating attributes are partially offset by the Group's exposure to catastrophic loss accumulation, as well as market, legislative and regulatory concerns due to its business concentration in Florida. The Group's positive rating factors are derived from management's conservative operating strategies as evidenced by its high-quality investment portfolio and its intensive catastrophe management plan that avoids concentrations of risk within any given area of Florida. The rating also recognizes the Group's solid operating performance, derived from its disciplined underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and pricing approach, its controlled business growth and efficiencies realized through automation initiatives. In addition, the Group maintains a sustainable competitive advantage due to its extensive local market knowledge and low cost structure, both of which are fostered by its exclusive agency network. Further, the Group benefits from its sponsorship by the Florida Farm Bureau Federation, which enhances customer loyalty and affinity. Finally, the rating acknowledges the commitment and support the Group receives from its parent, Southern Farm Bureau Casualty Insurance Company (Ridgeland, MS), which is one of the 50 largest U.S. insurance organizations and markets a full complement of insurance products. The Group's negative rating factors include its geographic concentration as a Florida property writer, which exposes it to catastrophic loss accumulation from hurricanes. This was particularly evident in 2004, when Hurricanes Charley, Frances, Ivan and Jeanne resulted in significant gross incurred losses. However, the Group maintains a comprehensive reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. program, integrated with coverage from the Florida Hurricane Catastrophe Fund, designed to withstand a net pre-tax "250-year season" loss (considering both frequency and severity of loss) without impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. in operations. Consequently, while gross exposure from these hurricanes was high, net incurred losses were reduced to a manageable level. Additionally, the Group's operating performance deteriorated in prior years, driven by rising loss costs for private passenger auto liability, primarily bodily injury and personal injury protection coverages. Furthermore, a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in homeowners loss experience also adversely impacted underwriting results as emerging causes of loss (such as sinkhole sinkhole or sink or doline Depression formed as underlying limestone bedrock is dissolved by groundwater. Sinkholes vary greatly in area and depth and may be very large. activity and mold mold, name for certain multicellular organisms of the various classes of the kingdom Fungi, characteristically having bodies composed of a cottony mycelium. The colors of molds are caused by the spores, which are borne on the mycelium. damage) drove loss costs upward. However, the Group implemented numerous strategic initiatives that resulted in a significant improvement in core underwriting results and operating earnings since the beginning of 2003. For current Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , independent data and analysis on more than 3,000 individual property/casualty companies, groups and industry composites, please visit http://www.ambest.com/pc. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com |
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