AM Best Revises Outlooks to Negative for Farmers Mutual Fire Insurance Company of Marble, Pennsylvania

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 Farmers Mutual Fire Insurance Company of Marble, Pennsylvania (Farmers Mutual) (Marble, PA).

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

The revised outlooks reflect the increased volatility in Farmers Mutual’s key operating performance metrics in recent years, particularly in 2023, due to higher loss activity associated with weather-related events and fires, in conjunction with inflationary pressures that have driven loss costs upward. This has caused overall results to start shifting towards levels more closely aligned with carriers assessed at the adequate level, as opposed to the current strong level. Furthermore, through year-end 2023, the company expects to post its first net loss in over 10 years, as well as a combined ratio moderately above break-even. While management is addressing the decline in operating performance through rate increases and tightening of its underwriting guidelines, the ultimate effectiveness of these measures remains uncertain.

The ratings also reflect Farmers Mutual’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), along with its conservative underwriting and reserve leverage measures. The company has a limited business profile as a single-state personal property writer in Pennsylvania, which exposes results to potentially frequent and severe weather-related events, as well as possible competitive and/or regulatory challenges. Overall, Farmers Mutual’s risk management capabilities are considered to be appropriate for its complexity of business and overall risk profile.

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