AM Best Removes From Under Review With Negative Implications and Affirms Credit Ratings of Florida Farm Bureau Group’s Members

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “bbb+” (Good) of Florida Farm Bureau Casualty Insurance Company and its fully reinsured subsidiary, Florida Farm Bureau General Insurance Company, collectively referred to as Florida Farm Bureau Group. The outlook assigned to the FSR is stable while the outlook assigned to the Long-Term ICRs is negative. Both companies are domiciled in Gainesville, FL.

The Credit Ratings (ratings) reflect Florida Farm Bureau Group’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. Additionally, the ratings reflect enhancement given the implicit and explicit support provided by its parent, Southern Farm Bureau Casualty Insurance Company.

Florida Farm Bureau Group’s ratings were initially placed under review with negative implications on Nov. 17, 2023, following significant deterioration in the group’s key balance sheet strength metrics through the first nine months of 2023, primarily due to loss activity from Hurricane Idalia. Ongoing surplus volatility, concurrent with increasing net premiums due to sizable rate activity prompted elevated underwriting leverage measures, as well as erosion in the group’s overall level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). In response to these adverse trends, management implemented two new reinsurance agreements, focusing on its personal automobile and commercial lines business, with the goal of reducing net volatility as surplus is rebuilt through operations.

Ultimately, AM Best expects that additional reinsurance support, alongside considerably higher rates, a refined book of business, and recently enacted legislative changes in the Florida property insurance market will favorably impact the group’s key balance sheet strength metrics, bringing them more in-line with its peer composite group, along with stimulating continued improvement in operating results. Therefore, the ratings have been removed from under review with negative implications. However, the negative outlook on the Long-Term ICRs reflects the volatility exhibited over the most recent five-year period, which albeit improved, has not yet returned to historically profitable levels. AM Best will continue to monitor the group’s results for consistency and stabilization, before the Long-Term ICR outlook is considered to be resolved.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.