A.M. Best Co. has downgraded the financial strength rating to B (Fair) from A- (Excellent) of Mississippi Farm Bureau Mutual Insurance Company (MFB) (Jackson, Miss.). The rating remains under review with negative implications.
The downgrade is attributable to current loss estimates from Hurricane Katrina, which are considerably outside A.M. Best’s expectations and account for a substantial portion of the company’s capital. MFB’s rating was previously downgraded on Oct. 14, 2005 to reflect the deterioration in risk-adjusted capital and anticipated surplus loss due to significant gross and net losses from Hurricane Katrina. At that time, the rating remained under review with negative implications pending further loss settlements and discussions with MFB’s management regarding potential capital enhancement plans.
Although management continues to explore capital enhancement plans, further negative rating action is warranted at this time given the magnitude of the losses.
The rating will remain under review pending additional discussions with MFB’s management and a re-evaluation of the capital requirements to support the company’s current rating.
In the absence of improved risk-adjusted capitalization, MFB’s rating will likely be downgraded further.
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