AM Best Revises Outlooks to Stable for Farmers Mutual Fire Insurance Company of Salem County

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative 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 Salem County (Farmers of Salem) (Delaware).

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

The revision of the outlooks to stable from negative reflects Farmers of Salem’s sustained improvement in balance sheet strength and operating performance following the volatility that contributed to the negative outlooks. Overall, Farmers of Salem has improved its balance sheet strength and operating performance, steadily reflecting the company’s effectiveness in risk selection, exposure management, aggressive correction actions and pricing adequacy strategy.

Risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), has strengthened, supported by improved earnings and surplus growth, while remaining resilient under catastrophe and terrorism stress scenarios. The company maintains solid liquidity, manageable underwriting leverage and a comprehensive reinsurance program.

The adequate operating performance reflects improved underwriting results following management’s implementation of corrective actions, including rate increases, tighter underwriting guidelines, agency management initiatives, expense actions and enhanced use of data analytics. These initiatives contributed to a significant improvement in underwriting performance in 2024 and a return to underwriting profitability in 2025, with favorable results continuing through the first half of 2026. While longer-term results remain impacted by prior weather-related volatility, recent performance demonstrates improved stability in Farmers of Salem’s core earnings.

The stable outlooks reflect AM Best’s expectation that Farmers of Salem’s overall balance sheet strength will remain very strong supported by the strongest level of risk-adjusted capitalization, as measured by BCAR, and the company’s operating performance will continue to support the adequate assessment based on its underwriting strategy and discipline to generate organic surplus growth.

The limited business profile reflects Farmers of Salem’s geographic and product concentration, primarily in New Jersey. The geographic and product distribution exposes the company to weather losses, which are mitigated through a comprehensive reinsurance program. The ERM assessment of appropriate reflects Farmers of Salem’s formal ERM program that is deemed appropriate for the company’s size and business profile.

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