AM Best Removes From Under Review With Negative Implications, Affirms Credit Ratings of Germania Farm Mutual Insurance Association and Core Subsidiaries; Assigns Positive Outlooks

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “bb+” (Fair) of Germania Farm Mutual Insurance Association and its subsidiaries: Germania Fire & Casualty Company, Germania Insurance Company and Germania Select Insurance Company. Collectively, these companies comprise Germania Mutual Group (Germania). Concurrently, AM Best has removed from under review with negative implications and affirmed the FSR of B (Fair) and the Long-Term ICR of “bb+” (Fair) of Germania Property & Casualty Insurance Company (GPC), a wholly owned subsidiary of Germania Farm Mutual Insurance Association. At the same time, AM Best has removed from under review with negative implications and affirmed the FSR of B (Fair) and the Long-Term ICR of “bb+” (Fair) of Germania Life Insurance Company (Germania Life). The outlook assigned to these Credit Ratings (ratings) is positive. All companies are domiciled in Brenham, TX.

The ratings of Germania reflect the group’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

Germania’s ratings have been removed from under review with negative implications following AM Best’s completed analysis and assessment of Germania’s financial and operational plans. Following material capital erosion in 2023, the group’s ratings were downgraded and subsequently placed under review with negative implications in September 2024. At the time, management had communicated near-term operational and capital management plans to correct recent erosion, which included external funding, rate actions, deductible changes, exposure management and reduced policy counts. Germania successfully implemented most of these strategies, excluding external funding, leading to capital levels rebounding in 2024, along with risk-adjusted capitalization, which is considered very strong, as measured by Best’s Capital Adequacy Ratio (BCAR). While overall improvement has been observed and management’s actions appear to be gaining traction, further improvement is expected in the near term, particularly regarding significant moderation of unfavorable underwriting trends and continued improvement in – and reduced volatility of - risk-adjusted capitalization.

The positive outlooks reflect AM Best’s expectation that Germania will maintain its current balance sheet strength assessment, supported by its very strong level of risk-adjusted capitalization, as well as sufficient capitalization and liquidity at the consolidated level, while meeting its operating performance targets.

The ratings of GPC reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal ERM.

The ratings of Germania Life reflect its balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal ERM.

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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