AM Best Revises Issuer Credit Rating Outlook to Negative for Members of Tennessee Farmers Insurance Companies

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Ratings (Long-Term ICR) and affirmed the Financial Strength Ratings (FSR) of A+ (Superior) and the Long-Term ICRs of “aa” (Superior) of Tennessee Farmers Mutual Insurance Company and its affiliate Tennessee Farmers Assurance Company, which are members of Tennessee Farmers Insurance Companies (TFIC). The outlook of the FSRs is stable. At the same time, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) of Tennessee Farmers Life Insurance Company (TFLIC). The outlook of these Credit Ratings (ratings) is stable. All companies domiciled in Columbia, TN.

The ratings reflect TFIC’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The revision of the Long-Term ICR outlook to negative from stable reflects AM Best’s concern that TFIC will not be able to reverse the negative trend in its operating performance over the near-term. The recent deterioration in performance is due to a period of heightened frequency and severity of large claims as a direct impact of severe windstorms (convective storms including tornadoes) that occurred in March 2023, which developed into the second most significant weather event in the group’s history.

TFIC’s balance sheet strength assessment is supported by its risk-adjusted capitalization, which remained at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). Other balance sheet strength considerations include low underwriting leverage ratios, consistently favorable reserve development and a low-risk investment profile.

The favorable business profile reflects TFIC’s strong market leadership position in a competitive environment, where a productive and stable distribution agency is leveraged throughout the regions of Tennessee. The group's purpose is to service the farmer community in Tennessee. The group collectively offers a full line of personal insurance products and services to members of the Tennessee Farm Bureau Federation.

TFIC’s ERM assessment of appropriate reflects the group’s established risk management framework with stated risk tolerances, limits and controls. TFIC continues to voluntarily file an Own Risk Solvency Assessment Report (ORSA) with the Tennessee insurance department that is updated annually.

The ratings of TFLIC reflects its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM.

The stable outlooks reflect AM Best’s expectation that TFLIC will maintain its balance sheet strength, operating performance, and business profile assessments over the intermediate term.

TFLIC’s balance sheet strength assessment is supported by its risk-adjusted capitalization, which remained at the strongest level at year-end 2023, as measured by BCAR. This balance sheet strength assessment is further complemented by quality of capital, favorable liquidity measures and low reinsurance dependence.

TFLIC’s operating performance assessment is supported by a proven track record of profitability on a pre-tax basis extending over 20 years. Total collected life premiums have increased as market conditions saw greater demand for individual life products while elevated marketing efforts attracted new members. TFLIC’s individual life business continues to dominate its earnings profile.

The neutral business profile reflects TFLIC’s strong market position in a competitive environment. TFLIC markets life and annuity products to Tennessee Farm Bureau Federation members. Approximately 90% of the membership owns property/casualty policies, and approximately 31% of that group owns a life company product.

TFLIC’s ERM assessment of appropriate reflects the group’s established risk management framework, which is fully integrated with the parent company, TFIC. TFLIC considerations are also included in the company’s annual ORSA report.

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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