The ratings firm also pointed out that the company's operating earnings have been volatile because of weather-related underwriting losses and lower investment income levels.

On a positive note, Best observed American Family's volatile underwriting performance is improving, and if the trend is sustained, it will help strengthen the company's overall capitalization.

Best also remarked that at the current rating level, the insurer has a sound capital position and a well-established regional market presence as a leading personal lines insurer in the Midwest.

Commenting on Best's ratings action, an American Family spokesperson said the company respects the ratings firm's decision, "but we continue to be a very strong and stable company financially, and that's reflected in the ?A' rating we received."

"We are doing extremely well in important financial categories: our surplus is increasing, our combined ratio has shown substantial improvements, and we have increased catastrophe reinsurance coverage," Ken Muth, spokesperson for the company, told National Underwriter.

"We have also reduced our investments in stock markets, so we are now less vulnerable to market shifts," Mr. Muth said.

American Family specializes in property and casualty insurance, but also offers life, health and homeowners' coverage, as well as investment and retirement-planning products.

Its insurance products include farm owners, inland marine, commercial multiperil, personal and commercial umbrella, fire and allied lines. Last year, the insurer posted $58.2 in net profit, with $5.3 billion in sales.