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FOR IMMEDIATE RELEASE
OLDWICK - MARCH 10, 2023 12:50 PM (EST)
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) 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, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) of Texas Farm Bureau Mutual Insurance Company and Texas Farm Bureau Underwriters. The outlook of these Credit Ratings (ratings) is stable. These companies are affiliates of the Group and are 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 AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The Group’s balance sheet strength is supported by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), a relatively conservative investment portfolio, adequate liquidity measures and a comprehensive reinsurance program. The operating performance assessment is adequate, but underwriting volatility has adversely impacted 2021 and 2022 results. The limited business profile reflects the Group’s geographic concentration within Texas, which has resulted in volatility in certain years. AM Best considers the Group’s ERM program to be appropriate for its size and scale of operations.
The revision of the outlooks to negative reflects pressure on the Group’s operating performance relative to AM Best’s current adequate assessment. Unfavorable underwriting results over the last two years were driven by elevated catastrophic weather events, along with industry-wide challenges being experienced in the private passenger auto line of business. Results in 2021 were impacted by multiple severe weather events in Texas, and 2022 results were mainly impacted by an increase in total loss severity as a result of inflation and corresponding loss cost pressures. Management has responded by implementing rate increases across all lines of business, as well as more granularity in pricing segmentation with a focus on improving rate adequacy in an effort help stabilize results.
The ratings of Texas Mutual reflect its balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile, appropriate ERM, as well as rating enhancement given the level of its integration within the Group.
Texas Mutual’s balance sheet strength is supported by its risk-adjusted capitalization at the strongest level, as measured by BCAR, a relatively conservative investment portfolio, adequate liquidity measures and a comprehensive reinsurance program. The marginal operating performance assessment is due to performance fluctuations driven by weather-related losses. Texas Mutual’s limited business profile reflects its geographic concentration within Texas, which has resulted in volatility in certain years. AM Best considers Texas Mutual’s ERM program to be appropriate for its size and scale of operations.
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.