AM Best Revises Outlooks to Negative for Farm Bureau Mutual Insurance Company of Arkansas, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Farm Bureau Mutual Insurance Company of Arkansas, Inc. (FBMICA) (Little Rock, AR).

The Credit Ratings (ratings) reflect FBMICA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The revised outlooks reflect continued deterioration in the company’s operating results, which have subsequently prompted reductions in its policyholders’ surplus. In 2021, the company reported its largest underwriting loss in the past 10 years, mainly driven by catastrophe events including wind, tornadoes and winter storms. FBMICA has made efforts to mitigate volatility through rate and insurance-to-value changes, exposure management strategies, new inspection programs and stricter underwriting guidelines. AM Best’s expectation is that these actions will come to fruition and improve operating results. In the absence of improvement, FBMICA’s ratings are likely to be downgraded.

Despite surplus declines, FBMICA’s balance sheet continues to be supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), a comprehensive reinsurance program and a conservative investment portfolio. The business profile assessment reflects the company’s concentration risk as a personal property writer solely in Arkansas. The company’s ERM practices remain appropriate and in line with its risk profile given the size and scope of operations in a single state.

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.

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