A.M. Best Revises Issuer Credit Rating Outlook to Stable for Kentucky Farm Bureau Mutual Insurance Company; Affirms Ratings

OLDWICK, N.J.--()--A.M. Best has revised the outlook for the issuer credit rating (ICR) to stable from negative and affirmed the financial strength rating (FSR) of A (Excellent) and the ICR of “a+” of Kentucky Farm Bureau Mutual Insurance Company (KFB Mutual) (Louisville, KY). The outlook for the FSR remains stable.

The ratings of KFB Mutual reflect its improving trend of underwriting and operating earnings since 2012, with underwriting profits posted in 2013 and 2014, supportive risk-adjusted capitalization, excellent business profile in Kentucky and the concrete steps being taken to reduce catastrophic loss exposure and further improve earnings. These steps include multiple rate increases across all lines, tightening property underwriting guidelines, increasing deductibles and canceling or non-renewing unprofitable or higher risk accounts.

These mitigation initiatives followed unfavorable operating performance by KFB Mutual prior to 2013, primarily driven by sizable underwriting losses. KFB Mutual’s earnings were adversely impacted by more frequent and severe weather-related events during this period, including losses from hail storms, wind and tornadoes throughout Kentucky in 2012. However, consistent investment returns and improved underwriting performance have allowed KFB Mutual to generate solid surplus growth in recent years.

Although the stable outlook implies that the prospective performance and risk-adjusted capitalization of KFB Mutual are expected to remain in line with A.M. Best's expectations, the ratings could face renewed pressure if the currently improving operating performance trend were to reverse itself or if risk-adjusted capitalization were to weaken materially.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

  • Catastrophe Analysis in A.M. Best Ratings
  • Rating Members of Insurance Groups
  • Risk Management and the Rating Process for Insurance Companies
  • Understanding BCAR for Property/Casualty Insurers

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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Michael T Venezia, 908-439-2200, ext. 5034
Senior Financial Analyst
michael.venezia@ambest.com
or
Gary Davis, 908-439-2200, ext. 5665
Assistant Vice President
gary.davis@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Michael T Venezia, 908-439-2200, ext. 5034
Senior Financial Analyst
michael.venezia@ambest.com
or
Gary Davis, 908-439-2200, ext. 5665
Assistant Vice President
gary.davis@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com