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Best’s News & Research Service - April 21, 2016 09:38 AM (EDT)

A.M. Best Revises Outlook to Positive for United Farm Bureau of Indiana Group Members

  • April 21, 2016 09:38 AM (EDT)
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Oldwick //BestWire// - A.M. Best has revised the outlooks to positive from stable and affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit ratings (ICR) of “bbb+” for the members of the United Farm Bureau of Indiana Group (Indiana Farm Bureau): United Farm Family Mutual Insurance Company and its wholly owned subsidiary, UFB Casualty Insurance Company.

In addition, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of United Farm Family Life Insurance Company (UFF Life). A.M. Best also has affirmed the FSR of A- (Excellent) and the ICR of “a-” of United Home Life Insurance Company (UH Life). The outlooks for each of the ratings of the life companies are stable. All companies are domiciled in Indianapolis, IN.

The revised outlooks for Indiana Farm Bureau reflect the group’s improved underwriting results and surplus appreciation over the past three years. As a result, operating performance has been favorable, underwriting leverage ratios have improved, and overall risk-adjusted capitalization has strengthened. These results are due to underwriting and exposure mitigation initiatives that have materialized favorably. The positive outlooks reflect A.M. Best’s opinion that favorable operating results and improvements in risk-adjusted capitalization will continue.

Offsetting rating factors include Indiana Farm Bureau’s volatile results over the previous five years. While risk-adjusted capitalization has improved, the group’s underwriting leverage ratios remain slightly elevated compared with the industry composite. Additionally, the group’s return on equity and revenue trail the composite due to large underwriting losses in earlier years. As all of the group’s business is conducted in Indiana, it also remains exposed to potential concentration risk on regulatory issues and catastrophic events.

The ratings of UFF Life reflect the company’s strong risk-adjusted capitalization, consistent profitability and its stable business profile in which less than 25% of total reserves are in interest-sensitive products. These positive rating factors are partially offset by its lower rates of return relative to the industry and its exposure to geographic concentration risk, as about two-thirds of direct premiums originate from Indiana.

The ratings of UH Life reflect the company’s role as a provider of life insurance products outside the core market of Indiana Farm Bureau Incorporated (INFB). The ratings also recognize the company’s strong risk-adjusted capital position, good credit quality of its investment portfolio and its consistently positive, albeit fluctuating operating earnings. Offsetting these factors is the company’s modest contribution to the organization’s overall operations, limited business profile and its modest and fluctuating profitability ratios.

This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.

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