The A.M. Best Co. has affirmed its financial rating of Rome’s State Mutual Insurance Co. but downgraded the outlook for the Rome firm from stable to negative. Best issued a financial strength rating of B plus for the company.

Founded in 1899, A.M. Best Co. is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors.

Best expressed concern about State Mutual’s exposure in its real estate- based portfolio along with a shrinking number of premium writings.

State Mutual has experienced growing numbers of delinquencies and foreclosure activity in its mortgage loan holdings. Best also expressed concerns that much of the mortgage holdings are focused on Northwest Georgia, which has been hit hard by the poor economy.

A.M. Best analysts report that the company is adequately capitalized but stated that any additional weakening of its investment portfolio would hurt State Mutual’s risk-adjusted capital position.

Best did report that State Mutual has continued to show profitable net operating revenues over the last five years. The rating service says the profits have been fueled by investment income, management fees from its affiliated companies and cuts in operating expenses.

State Mutual officials could not be reached for comment Friday.