Best’s News & Research Service - June 23, 2020 01:58 PM (EDT)
AM Best Affirms Credit Ratings of Farm Bureau Life Insurance Company
- June 23, 2020 01:58 PM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” of Farm Bureau Life Insurance Company (FBL). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb+” of FBL Financial Group Inc. [NYSE: FFG], the holding company of FBL. The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in West Des Moines, IA.
The ratings reflect FBL’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Risk-adjusted capital is assessed at the strongest level and is supported by good liquidity metrics. FBL has access to multiple liquidity backstops, as well as operating and financial leverage ratios that are well-below tolerance thresholds set by AM Best and good interest coverage ratios. FBL maintains an investment portfolio that is of good overall quality with moderately higher-than-average investment risk when compared with industry benchmarks. FBL’s commercial mortgage loan portfolio is high relative to capital with a large allocation to retail, which may underperform in the current COVID-19 environment.
FBL’s operating performance compares favorably with industry benchmarks on a number of metrics and FBL benefits from cross-sell rates that are much higher than industry and peer averages. Investment and mortality experience remains favorable, although FBL, along with the industry, faces continued spread compression, as investment yields have declined slightly over the previous five years. A majority of FBL’s in-force annuity and ordinary life insurance business is at the guaranteed minimum crediting rate and there is some exposure to higher guarantees. Additionally, a high percentage of annuity liabilities lack surrender protection charges, which exposes the company to disintermediation risk should interest rates rise rapidly.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.