Best’s News & Research Service - March 02, 2022 01:07 PM (EST)
AM Best Upgrades Issuer Credit Ratings for Oklahoma Farm Bureau Mutual Insurance Company and Its Subsidiary
- March 02, 2022 01:07 PM (EST)
Oldwick //BestWire// - AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “bbb” (Good) and affirmed the Financial Strength Rating (FSR) of B++ (Good) for the members of the Oklahoma Farm Bureau Group: Oklahoma Farm Bureau Mutual Insurance Company and its wholly owned subsidiary, AgSecurity Insurance Company, collectively referred to as Oklahoma Farm Bureau. The outlook for the Long-Term ICR has been revised to stable from positive while the FSR outlook is stable. All companies are domiciled in Oklahoma City, OK.
These Credit Ratings (ratings) reflect Oklahoma Farm Bureau’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 upgrade in the Long-Term ICR reflects Oklahoma Farm Bureau’s continued improvement in its quality of policyholder surplus. Historically, the group’s surplus appreciation and overall investment results have been dampened by aggressive surplus note repayments to take advantage of claw-back provisions and reduce overall interest paid on the notes. At one point, surplus notes had represented a majority of policyholder surplus.
Management’s exposure and risk management initiatives combined with several corrective actions to improve profitability materialized favorably as reflected by Oklahoma Farm Bureau’s much improved operating performance over the past five years. Pre-tax operating gains, coupled with positive overall net income, enabled the group to pay down $31 million in surplus notes over the past five years with year-end 2021 total surplus notes representing less than 3% of policyholder surplus.
As a single state writer in Oklahoma, the group is exposed to frequent and severe weather-related events and variability in overall results. In 2021, the group was impacted by four storms that tempered overall earnings and resulted in its combined ratio being modestly above break-even for the first time in eight years. Nevertheless, operating performance remains well-positioned within the adequate assessment range.
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.