A.M. Best Revises Issuer Credit Rating Outlook to Positive for Farmers Union Mutual Insurance Company

OLDWICK, N.J.--()--A.M. Best has revised the outlook to positive from stable and affirmed the issuer credit rating (ICR) of “a” for Farmers Union Mutual Insurance Company (FUMI) (Jamestown, ND). Concurrently, A.M. Best has also affirmed FUMI’s financial strength rating of A (Excellent). The outlook for the FSR remains stable.

The revised outlook to positive for the ICR is a reflection of FUMI’s consistently favorable operating results, consistent surplus appreciation and favorable reserve development. Profitability is driven by favorable underwriting results and positive net investment income that has been reported for five consecutive years and continued in 2014. Management continuously sets forth initiatives to maintain profitability including higher deductibles, rate increases, technological advancements, and the re-underwriting of the property book. Risk-adjusted capitalization is solid and well supportive of the current ratings. In addition, loss reserves are repeatedly redundant on both and accident- and calendar-year basis.

Partially offsetting these positive factors are the company’s geographic concentration in North Dakota and property-predominant focus. The company’s single-state concentration and focus on property business leaves surplus susceptible to adverse weather conditions, as well as changes with competitors and in the judicial and legislative environment.

Future positive rating action is contingent upon FUMI’s ability to sustain its current levels of operating profitability while maintaining solid overall risk-adjusted capitalization and underwriting leverage measures. Negative rating action may follow a sudden, unexpected, and material decline in risk-adjusted capitalization or a sustained deterioration in operating performance.

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:

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

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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best Company
Colette Fearon, 908-439-2200, ext. 5548
Financial Analyst
colette.fearon@ambest.com
or
Joseph Burtone, 908-439-2200, ext. 5125
Assistant Vice President
joseph.burtone@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 Company
Colette Fearon, 908-439-2200, ext. 5548
Financial Analyst
colette.fearon@ambest.com
or
Joseph Burtone, 908-439-2200, ext. 5125
Assistant Vice President
joseph.burtone@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