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Best’s News & Research Service - June 25, 2024 01:20 PM (EDT)

AM Best Downgrades Credit Ratings of North Carolina Farm Bureau Insurance Group Members

  • June 25, 2024 01:20 PM (EDT)
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//BestWire// - AM Best has downgraded the Financial Strength Rating (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” (Excellent) from “a+” (Excellent) of North Carolina Farm Bureau Mutual Insurance Company and Farm Bureau Insurance of N.C., Inc., collectively known as North Carolina Farm Bureau Insurance Group (North Carolina Farm Bureau). The outlook of the Long-Term ICR has been revised to stable from negative while the outlook of the FSR is stable. Both companies are domiciled in Raleigh, NC.

The Credit Ratings (ratings) reflect North Carolina Farm Bureau’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect deterioration in North Carolina Farm Bureau’s key balance sheet strength and operating return metrics, which were affected by the group’s declining levels of risk-adjusted capitalization. In addition, the group’s operating performance has been volatile over the past few years with a marked deterioration in its underwriting results in the most recent two-year period and first-quarter 2024. As a result, the group’s five-year average operating return metrics lag the private passenger standard auto and homeowner’s insurance composite. North Carolina Farm Bureau’s underwriting results have been challenged by inflation, weather-related losses, rising reinsurance costs and the elimination of a quota share contract, as well as regulatory restrictions on rates. Management has put in place multiple corrective actions to restore the group to underwriting profitability.

The group’s neutral business profile remains supported by its strong presence in North Carolina as the state’s No. 3 writer and its relationship with the North Carolina Farm Bureau Federation. North Carolina Farm Bureau has an ERM program appropriate to the size and scale of its operations.

The stable outlooks reflect AM Best’s expectation that North Carolina Farm Bureau will maintain the group’s risk-adjusted capitalization at levels that are supportive of the current ratings, reinforced by stabilization in operating performance given management's various initiatives to improve underwriting performance.

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. 

North Carolina Weather Financial Strength Press Release A.M. Best Rating Services, Inc. Property And Casualty Insurers Best's Credit Rating Action Farmland Issuer Credit Rating

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