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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 Farm Bureau County Mutual Å˽ðÁ«´«Ã½Ó³»­ Company of Texas and Texas Farm Bureau Casualty Å˽ðÁ«´«Ã½Ó³»­ Company (together known as Texas Farm Bureau Casualty Group (the group).

The outlook of these Credit Ratings (ratings) is negative. At the same time, AM Besthas removed from under review with negative implications and affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) of Texas Farm Bureau Mutual Å˽ðÁ«´«Ã½Ó³»­ Company and Texas Farm Bureau Underwriters (together known as Texas Farm Bureau Mutual Group). The outlook assigned to these ratings is negative.

All companies are domiciled in Waco, Texas, and are collectively referred to as Texas Farm Bureau Å˽ðÁ«´«Ã½Ó³»­ Group.

AM Best said the ratings reflect Texas Farm Bureau Å˽ðÁ«´«Ã½Ó³»­ Group’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.

Following a year of material surplus deterioration, the group implemented a pooling agreement between its property affiliates (Texas Farm Bureau Mutual Å˽ðÁ«´«Ã½Ó³»­ Company) and the casualty operations (Texas Farm Bureau Casualty Å˽ðÁ«´«Ã½Ó³»­ Company), consisting primarily of personal auto, effective Jan. 1, 2024, which will allow the group to manage capital more effectively. Under the pooling agreement, premiums, losses and expenses are combined and pro-rated, with participation percentages based on the individual members’ policyholder surplus.

The group has experienced three straight years of operating losses and a high degree of volatility, AM Best said. Net underwriting losses were driven by the extraordinary weather-related events in 2023, the ratings agency said. These weather-related events resulted in 13 catastrophe losses, as classified by the group, four of which exceeded its occurrence catastrophe retention level.

In response to these adverse trends, management has put in place a series of initiatives to return to profitability and improve balance sheet strength metrics, including significant rate increases, increased segmentation on the auto line of business and more-refined underwriting guidelines

AM Best said the negative outlooks reflect the uncertainty and execution risks associated with these efforts. Should key balance sheet or operating performance metrics not stabilize as a result of these actions, the ratings may be downgraded.

Source: AM Best

Topics Texas Agribusiness AM Best