Best’s News & Research Service - May 09, 2017 04:07 PM (EDT)
A.M. Best Upgrades Credit Ratings of United Farm Bureau of Indiana Group Members
- May 09, 2017 04:07 PM (EDT)
Oldwick //BestWire// - A.M. Best has upgraded the Financial Strength Rating (FSR) to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” from “bbb+” of 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. The outlooks of these Credit Ratings (ratings) have been revised to stable from positive.
Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term 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 Long-Term ICR of “a-” of United Home Life Insurance Company (UH Life). The outlooks of these ratings remain stable. All companies are domiciled in Indianapolis, IN.
The rating upgrades of Indiana Farm Bureau reflect the group’s sustained improvement in underwriting results and risk-adjusted capitalization over the past four years. The improved performance is a result of multiple underwriting initiatives undertaken in previous years. These initiatives included increasing rate adequacy, revising deductibles and strengthening reinsurance programs. As a result of the profitable earnings, the group has increased risk-adjusted capitalization significantly over the past five years. The group’s improved underwriting, coupled with its strong brand presence in Indiana, is expected to result in favorable future earnings.
Offsetting rating factors include Indiana Farm Bureau’s volatile results in earlier years mainly due to frequent and severe weather-related events. Also, the group has suffered deterioration in its auto liability line, which is a trend throughout the industry and not specific to Indiana Farm Bureau. Further, as all of the group’s business is conducted in Indiana, it remains exposed to potential concentration risk on regulatory issues and catastrophe events.
The ratings of UFF Life reflect the company’s strong risk-adjusted capitalization, consistent profitability and its stable business profile, which consists of primarily whole and term life products. These positive rating factors are offset partially by its lower rates of profitability relative to the industry and its exposure to geographic concentration risk, as over 60% 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 are 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 Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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