AM Best


AM Best Revises Outlooks to Stable for Texas Farm Bureau Casualty Group Members, Affirms Credit Ratings of Affiliates


CONTACTS:

Angelo Lozano, CFA, ARe
Financial Analyst
+1 908 439 2200, ext. 5169
angelo.lozano@ambest.com

Joe Burtone
Director
+1 908 439 2200, ext. 5125
joseph.burtone@ambest.com
Christopher Sharkey
Manager, Public Relations
(908) 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
(908) 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - DECEMBER 14, 2018 09:58 AM (EST)
AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of Texas Farm Bureau Casualty Insurance Company and Farm Bureau County Mutual Insurance Company of Texas. These two companies comprise the Texas Farm Bureau Casualty Group (the Group).

Concurrently, A.M. Best also has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” of Texas Farm Bureau Mutual Insurance Company and Texas Farm Bureau Underwriters – A Reciprocal. The outlook of these Credit Ratings (ratings) remains stable. These companies are affiliates of the Group, and collectively referred to as Texas Farm Bureau Mutual Group (Texas Mutual). All companies are domiciled in Waco, TX.

The ratings of the Group reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings of Texas Mutual reflects its balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate ERM.

The revised outlook for the Long-Term ICR of the Group reflects its improved underwriting results in recent years, which when combined with income from the investment portfolio, has produced positive pre- and post-tax earnings and year-over-year growth in policyholder surplus. Management has implemented strict underwriting and pricing guidelines across its auto book, which over the past five years has been affected by increased bodily injury losses and the higher cost of vehicle repairs. Weather also has played a factor in recent years, specifically Hurricane Harvey, which produced record floods and resulted in higher auto physical damage claims. Over time, AM Best expects operating volatility to diminish as underwriting initiatives continue to materialize.

The balance sheet strength of the Group is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), at the 99.6 VaR confidence level, sound liquidity and comprehensive reinsurance protection that provides ample tail-risk protection. The balance sheet is further supported by acceptable levels of leverage and a history of strong policyholder surplus growth. These factors are offset partially by the Group’s limited financial flexibility.

The Group’s business profile is limited based on its product line and geographic concentration with auto business written entirely in Texas. AM Best considers the ERM framework appropriate given the Group’s size and scope in the Texas auto market. Risk management capabilities are commensurate, formalized and aligned with the operational needs of group.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.


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