AM Best

AM Best Downgrades Credit Ratings of Farm Bureau Mutual Insurance Company of Arkansas, Inc.; Places Credit Ratings Under Review


Lauren Magro
Financial Analyst
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Richard Attanasio
Senior Director
+1 908 882 1638

Christopher Sharkey
Associate Director, Public Relations
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Al Slavin
Senior Public Relations Specialist
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OLDWICK - SEPTEMBER 14, 2023 03:58 PM (EDT)
AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “bbb+” (Good) of Farm Bureau Mutual Insurance Company of Arkansas, Inc. (FBMICA) (Little Rock, AR). Concurrently, The Credit Ratings (ratings) have been placed under review with negative implications.

The ratings reflect FBMICA’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

The rating downgrades consider significant deterioration in FBMICA’s key balance sheet strength metrics through June 30, 2023, as evidenced by a 37.6% reduction in policyholders’ surplus, which has impacted the company’s risk-adjusted capitalization levels adversely. The decline was driven primarily by a higher frequency of severe weather-related events, particularly in the month of June and primarily in the form of wind/hail and tornado events. Management has continued to focus on improving rate adequacy and appropriately managing its exposures, and in response to current trends, has non-renewed unfavorable risks to refine its book of business, increased deductibles, and will be implementing actual cash value policies on certain exposures. However, given ongoing volatility over the past five-year period, the efficacy of the risk management program has come into question and the ERM assessment was lowered to marginal from appropriate.

Further, FBMICA’s ratings are under review with negative implications, pending the successful execution of various capital management efforts. Over the near term, AM Best expects that the company will move forward in pursuit of one or more strategies that are currently under consideration by management, which are anticipated to improve risk-adjusted capitalization levels. However, if these efforts are not successful and/or do not facilitate material improvement, the ratings may be downgraded further.

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.

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AMB# Company Name
000353 Farm Bureau Mutual Ins Co of Arkansas