OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (ICR) of “bb+” of Farmers Mutual Fire Insurance Company (Farmers) (Okarche, OK). The outlook for the Long-Term ICR has been revised to stable from negative, while the outlook for the FSR remains stable. The revised Long-Term ICR outlook reflects improvement in the company’s operating results and risk-adjusted capitalization in recent years. Concurrently, A.M. Best has withdrawn the Credit Ratings (ratings) as the company has requested to no longer participate in A.M. Best’s interactive rating process.
The ratings reflect Farmers’ historical below average operating results mostly driven by unprofitable underwriting results in prior years due to weather-related events, inadequate pricing, fire losses and an elevated expense ratio. As a predominantly single state property writer operating exclusively in Oklahoma, the company is further exposed to potential changes in the judicial and regulatory environments. Also, the company maintains an expense disadvantage as reflected by its elevated expense ratio relative to the personal property composite.
Farmers’ positive rating attributes are derived from its moderate underwriting leverage and high quality investment risk profile. In recent years, the favorable turnaround in operating results has been attributed to several factors including the lack of catastrophe events, improved underwriting and pricing, as well as enhanced exposure risk management to lower concentrations in weather-prone areas. However, the company will remain challenged due to its ongoing exposure to weather-related events and competitive market conditions. Disciplined underwriting and improved enterprise risk management capabilities will remain key factors in the company’s ongoing success.
This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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