A.M. Best Downgrades Ratings of RVOS Farm Mutual Insurance Group and Its Members

The downgrades and outlook are a result of the continued deterioration in RVOS’s risk-adjusted capitalization and operating performance in recent years. In 2008, the group’s surplus declined by 30% due to Hurricane Ike, which accounted for over $12 million in net losses. In addition, the group recorded significant unrealized capital loses in 2008. Although these investment losses have partially rebounded in 2009, underwriting losses remain elevated. As a result, surplus declined by nearly 15% through third quarter 2009.

Furthermore, RVOS’ underwriting expense ratio is unfavorable, having increased in successive years prior to 2009 due to technology expenditures and increased reinsurance cost. Although the group has adequate risk-adjusted capitalization for its ratings and has implemented rate increases and various re-underwriting initiatives, the negative outlook is reflective of the uncertainty associated with the successful implementation of these efforts.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts
Bob Podolski
(908) 439-2200, ext. 5731
bob.podolski@ambest.com
or
Joseph Burtone
(908) 439-2200, ext. 5125
joseph.burtone@ambest.com
or
Public Relations
Jim Peavy
(908) 439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com