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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 09, 2016 03:04 PM (EDT)
A.M. Best has revised the issuer credit rating (ICR) outlook to positive from stable and affirmed the financial strength rating (FSR) of A (Excellent) and the ICR of “a” of Farm Bureau Property & Casualty Insurance Company and Western Agricultural Insurance Company, which are collectively referred to as Farm Bureau Property & Casualty Group (Farm Bureau). The outlook for the FSR remains stable. Both companies are domiciled in West Des Moines, IA.
The outlook revision to positive reflects Farm Bureau’s favorable trend of underwriting and operating results in recent years, which has outperformed the composite average and strengthened its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The outlook revision further reflects A.M. Best’s expectation that the group’s favorable operating performance measures will be sustained, based on management’s well-developed enterprise risk management (ERM) capabilities, strong market position, disciplined underwriting practices and pricing strategy.
Farm Bureau’s positive rating attributes include its strong risk-adjusted capitalization, favorable five-year operating performance and well-established market presence in the Midwestern United States. The group’s balance sheet strength is reflective of its high quality investment portfolio, historically favorable loss reserve development trends and comprehensive reinsurance program. Additional strengths include Farm Bureau’s competitive advantages derived from its strong brand recognition, strengthened member service capabilities and exclusive agency force.
Farm Bureau is the leading farm and agricultural insurer in its eight-state operating territory. This position has been achieved through strong customer service-oriented business practices; the ability to cross sell property/casualty insurance products with life insurance products; efficient product distribution through exclusive agents; and its affiliation with Farm Bureau Federations, which facilitates marketing and government relations efforts, thereby providing greater access to its members. These strengths are further enhanced by management’s ongoing efforts to position the group for future success through refined underwriting standards, greater pricing sophistication and several other initiatives to advance product offerings and support the growth and retention of profitable business.
These positive rating factors are partially offset by the group’s geographic concentration in the Midwest, which exposes its earnings to catastrophe losses stemming from wind, hail and tornadoes and the need to maintain a comprehensive and significant reinsurance structure.
Positive rating action could occur if the group maintains ongoing favorable operating results that continue to strengthen its risk-adjusted capitalization.
The ratings could be negatively impacted by several years of unfavorable operating performance that causes a material drop in risk-adjusted capitalization.
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.
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