AM Best Drops Florida Farm Bureau Outlook to Negative After Surplus Declines
Credit-rating agency AM Best has downgraded its outlook for Florida Farm Bureau Casualty Co., from stable to negative, due to the company’s declining surplus in a disaster-prone state.
“The revised outlooks reflect the continued volatility in the group’s policyholder surplus,” AM Best said in a news release Wednesday.
In the last five years, Florida Farm Bureau’s surplus declined 13% or about $38 million, through the second quarter of 2021, the rating agency reported. The decline has been driven by underwriting losses from storms, hurricane activity and ongoing pressure from the automobile insurance line of business.
The numbers reflect the larger picture in Florida, in which most property insurers have reported declining surplus and losses in net income. At a Florida Senate committee hearing this week, the CEO of Citizens Property Insurance presented data showing that seven of the top 10 Florida-domestic property insurers had negative net income for the second quarter this year.
Farm Bureau, like other insurers, has taken steps to mitigate the losses, AM Best reported.
“The group has implemented a number of actions to improve its performance, including rate increases, non-renewal of undesirable risks and management of assignment of benefits issues,” along with a comprehensive catastrophe reinsurance program, the rating firm said. “However, the impact to surplus and reserves continues to be adverse and is likely to continue until the group’s various underwriting initiatives take effect to moderate losses.”
Florida Farm Bureau Group’s assessment reflects the group’s limited operating territory within a hurricane-prone state, AM Best said. Severe weather continues to be the group’s primary risk.
Florida Farm Bureau’s strength rating remained at “A-” or excellent, along with its long-term issuer credit ratings, AM Best said.