AM Best Assigns Credit Ratings to Farmers Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating (FSR) of B++ (Good) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) to Farmers Life Insurance Company (Farmers Life) (Knoxville, TN). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Farmers Life’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. Farmers Life is looking to build an insurance and reinsurance business writing direct and reinsuring fixed annuity business, with a focus on multiyear guaranteed annuities, fixed indexed annuities and guaranteed investment contracts. The company began sales of its multiyear guaranteed annuity product through independent marketing organizations in April 2022 with initially favorable premium growth of just over $40 million through the third quarter of 2022. The company is currently licensed in 19 states, including Texas, Ohio and Pennsylvania, with pending state approvals in an additional five jurisdictions.

Farmers Life’s strategy is driven in large part by an unconventional investment portfolio that allocates over 50% of invested assets into commercial and residential mortgage loans for enhanced yield. This appetite for real estate risk over a traditional bond-heavy portfolio stems from the experience of the ultimate owners of Farmers Life, members of the Jacobs Family, which collectively own a privately held real estate company that owns and manages over 5,000 multifamily units across the United States.

While Farmers Life currently maintains a favorable risk-adjusted capital position, as measured by Best’s Capital Adequacy Ratio (BCAR), and a balance sheet strength assessment of strong, AM Best notes that the company will likely face substantial competition from larger established players in the space as it scales up operations over time. Furthermore, Farmers Life also will need to monitor the relationships of contracted third-party service providers closely to manage non-core operations, including legal, compliance, administration, marketing and asset management.

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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