S&P Affirms Farm Bureau Mutual Insurance Co. of Idaho’s ‘BBBpi’ Rating

November 26, 2003

Standard & Poor’s has affirmed its ‘BBBpi’ counterparty credit and financial strength ratings on Farm Bureau Mutual Insurance Co. of Idaho (Farm Bureau). The ratings reflect its extremely strong capitalization, marginal operating performance, and high geographic concentration.

Major rating factors

— Farm Bureau’s capitalization at year-end 2002 was extremely strong. Its surplus stood at $113 million at year-end 2002. The company compares favorable with its similarly rated peers;

— Operating performance is marginal, with Standard & Poor’s earnings adequacy ratio of 15 percent and a five-year average return on revenue of 4.5 percent. Steadily increasing premium revenue reached $90 million in 2002 at a five-year compounded annual growth rate of 6 percent. However, the company has volatile net income;

— The company has significant geographic concentration, with 100 percent of net premiums written in Idaho. High concentration exposes the company to economic, regulatory, and competitive risks.

Based in Idaho, Farm Bureau writes homeowners, farmowners, and private passenger auto liability insurance busines. The company, which commenced operations in 1947, is licensed only in Idaho and is a member of the Farm Bureau of Idaho Group.

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