AM Best Downgrades Credit Ratings of North Carolina Farm Bureau Insurance Group Members

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” (Excellent) from “a+” (Excellent) of North Carolina Farm Bureau Mutual Insurance Company and Farm Bureau Insurance of N.C., Inc., collectively known as North Carolina Farm Bureau Insurance Group (North Carolina Farm Bureau). The outlook of the Long-Term ICR has been revised to stable from negative while the outlook of the FSR is stable. Both companies are domiciled in Raleigh, NC.

The Credit Ratings (ratings) reflect North Carolina Farm Bureau’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect deterioration in North Carolina Farm Bureau’s key balance sheet strength and operating return metrics, which were affected by the group’s declining levels of risk-adjusted capitalization. In addition, the group’s operating performance has been volatile over the past few years with a marked deterioration in its underwriting results in the most recent two-year period and first-quarter 2024. As a result, the group’s five-year average operating return metrics lag the private passenger standard auto and homeowner’s insurance composite. North Carolina Farm Bureau’s underwriting results have been challenged by inflation, weather-related losses, rising reinsurance costs and the elimination of a quota share contract, as well as regulatory restrictions on rates. Management has put in place multiple corrective actions to restore the group to underwriting profitability.

The group’s neutral business profile remains supported by its strong presence in North Carolina as the state’s No. 3 writer and its relationship with the North Carolina Farm Bureau Federation. North Carolina Farm Bureau has an ERM program appropriate to the size and scale of its operations.

The stable outlooks reflect AM Best’s expectation that North Carolina Farm Bureau will maintain the group’s risk-adjusted capitalization at levels that are supportive of the current ratings, reinforced by stabilization in operating performance given management's various initiatives to improve underwriting performance.

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