OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has removed from under review with negative implications and downgraded the Long-Term Issuer Credit Rating to “a” from “a+” and affirmed the Financial Strength Rating of A (Excellent) of Farm Bureau Mutual Insurance Company of Idaho and its indirect subsidiary, Western Community Insurance Company, collectively referred to as Farm Bureau of Idaho Group (Farm Bureau of Idaho). All companies are domiciled in Pocatello, ID. The outlook assigned to these Credit Ratings (ratings) is negative.
The ratings were placed under review with negative implications on Oct. 13, 2017, following the release of the updated Best’s Credit Rating Methodology (BCRM). These rating actions follow the completion of A.M. Best’s analysis of Farm Bureau of Idaho under the updated BCRM.
The ratings reflect Farm Bureau of Idaho’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The negative outlook reflects the company’s elevated underwriting losses, which in recent years has been impacted by elevated wildfire and wind storms, adverse auto liability development and uninsured motorist claims.
Farm Bureau of Idaho’s balance sheet strength is supported by it having the strongest level of risk-adjusted capitalization at the highest confidence level, comprehensive reinsurance protection, extremely conservative underwriting leverage and loss reserve ratios, and a high quality investment portfolio. However, the company has limited financial flexibility and limited scale, and several years of unfavorable reserve development. Farm Bureau of Idaho’s operating performance on a 5- and 10-year average basis is adequate. Key profitability metrics generally experience moderate volatility and compare unfavorably with peer averages. The company’s long-standing top market position as auto writer in Idaho is supportive of the neutral business profile assessment. Furthermore, the company services a niche group of Farm Bureau of Idaho Federation members through an exclusive agent network. Farm Bureau of Idaho also benefits from an appropriate ERM given its size and scale.
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