A.M. Best Downgrades Rating of Mississippi Farm Bureau Casualty Insurance Co.; Places Under Review with Developing Implications.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating (FSR) to B++ (Very Good) from A++ (Superior) of Mississippi Farm Bureau Casualty Insurance Company (MFBC) (Jackson, MS) and has placed the rating under review with developing implications.

MFBC previously received the FSR of A++ (Superior) of its parent, Southern Farm Bureau Casualty Insurance Company (SFB) (Ridgeland, MS), as a result of a 100% quota share reinsurance agreement. However, MFBC has purchased the renewal rights of Mississippi Farm Bureau Mutual Insurance Company (MFBM) (Jackson, MS), which changes the risk profile of MFBC as it will now retain property risks. As a result, MFBC no longer meets the criteria to receive the FSR of its parent and is being rated as a separate affiliate.

The rating is based on the explicit and implicit support of SFB as reflected in a capital contribution of $67 million to MFBC's surplus in November 2005 and anticipation of additional surplus contributions. In addition, the company continues to maintain a 100% quota share reinsurance agreement with SFB on the automobile business.

These positive rating factors are offset by the increased risk profile associated with retaining catastrophe exposed property business with a single state geographic concentration. In addition, because the renewal book of business was formerly with MFBM, which experienced significant losses as a result of Hurricane Katrina, A.M. Best is concerned with the execution of improved risk management.

The rating will remain under review pending further discussions with management regarding capital enhancement plans, a review of underwriting strategy and further assessment of the risk profile.

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