S&P Affirms FB Insurance Co. `Api' Rating

    NEW YORK--Standard & Poor's--March 22, 2001-- Standard & Poor's today affirmed its single-'Api' financial strength rating on FB Insurance Co.
    Key rating factors include the company's strategic importance to its parent, Kentucky Farm Bureau Mutual Insurance Co. (financial strength rating double-'Api'), and extremely strong capitalization and earnings, offset by volatility in both profitability and premium volume.
    The company mainly provides private passenger auto liability and auto physical damage insurance, distributed primarily by direct marketing. Headquartered in Louisville, Ky., it writes business entirely in its home state, Kentucky. It began business in 1967.

    Major Rating Factors:

--	The company (NAIC:23000) is strategically important to its parent, Kentucky Farm Bureau Mutual Insurance Co., and is a member of Kentucky Farm Bureau Group, a large insurance group with 1999 surplus of $588.8 million. Group support is therefore a factor in the rating.
--	Capital adequacy was extremely strong at year-end 1999, as measured by Standard & Poor's model, at more than 300%. Surplus, which stood at $26.2 million, has grown at a compound annual rate of 7.4% since 1992.
--	Operating performance has been extremely strong, with an average return on revenue of 21.1% from 1996 to 1999.
--	The company's returns have been volatile, however, which is a limiting factor. Return on assets, for example, has ranged between negative 0.3% and positive 7.6% for 1998 and 1995, respectively. Year-to-year changes in net premiums written have varied from negative 38.5% to positive 102.2% since 1993.

    Ratings with a 'pi' subscript are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings.
    Ratings with a 'pi' subscript generally are not modified with "plus" or "minus" designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said.--CreditWire.