AM Best Downgrades Credit Ratings of North Carolina Farm Bureau Insurance Group Members
25 June 2024 - 7:35PM
Business Wire
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. For more information,
visit www.ambest.com.
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Brinda Modi Shah Senior Financial Analyst +1 908 882
1767 brinda.shah@ambest.com Richard Attanasio Senior
Director +1 908 882 1638 richard.attanasio@ambest.com
Christopher Sharkey Associate Director, Public Relations
+1 908 882 2310 christopher.sharkey@ambest.com Al Slavin
Senior Public Relations Specialist +1 908 882 2318
al.slavin@ambest.com