AM Best

JANUARY 13, 2023 11:23 AM (EST)

AM Best Revises Issuer Credit Rating Outlook to Negative for Farmers Mutual of Tennessee

 Phinthip Dezuzio
Senior Financial Analyst
+1 908 439 2200, ext. 5751

Brian O’Larte
+1 908 439 2200, ext. 5138
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Al Slavin
Senior Public Relations Specialist
+1 908 439 2200, ext. 5098


OLDWICK - JANUARY 13, 2023 11:23 AM (EST)
AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Farmers Mutual of Tennessee (Farmers Mutual) (Knoxville, TN). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect Farmers Mutual’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The negative Long-Term ICR outlook reflects the company’s volatile operating performance over the past five years and decline in its policyholder surplus. The volatility in operating performance resulted from sizable underwriting losses, particularly in 2021 and 2022. The company’s unfavorable underwriting results were primarily driven by increased loss frequency and severity of weather-related loss events. Farmers Mutual also has a geographic concentration of risk, which leaves its susceptible to adverse weather conditions and has greatly attributed to the volatile operating results in the past five years.

While the company has implemented various underwriting initiatives such as rate increases, non-renewal of unprofitable accounts, conditional renewal by adding exclusions and loss control inspection to address the underwriting performance trends, the ultimate effectiveness of these efforts is uncertain. AM Best expects Farmers Mutual to improve its underwriting profitability. A prolonged continuation of adverse underwriting results may result in further negative rating actions. The stable outlook on the FSR reflects the company’s strongest level of risk-adjusted capital position, as measured by Best’s Capital Adequacy Ratio (BCAR).

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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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AMB# Company Name
010524 Farmers Mutual of Tennessee