S&P Report Sheds Light on Florida Farm Bureau’s Losses

February 11, 2022

Recently posted data provides new insight on the dire financial situation for Florida Farm Bureau, one of four carriers that announced it would stop writing or non-renew thousands of homeowner policies in Florida this year.

Farm Bureau, which industry analysts have said is something of a bellwether for the distressed Florida property insurance market, recorded net losses for seven straight quarters from 2019 through most of 2021. That’s a total of almost $50 million in losses, despite an increase in direct premium written in recent years, according to an S&P Global Market Intelligence report published Thursday.

The third quarter of 2021 was the worst so far for the insurer, with a negative net income of almost $18 million. Policyholder surplus also dropped, from $283 million in the first quarter of 2019 to $232 million in the third quarter of 2021. The S&P information came in part from income statements filed with the National Association of Insurance Commissioners.

Florida Farm Bureau, part of Mississippi-based Southern Farm Bureau, told its Florida agents recently that it would no longer write new homeowner and dwelling fire policies, starting this month. The company also plans to non-renew some other types of policies that are driving losses in the state, and would start identifying homes that have shingle or tile roofs, by age.

As of last summer, Florida Farm Bureau had almost 68,000 in-force homeowner policies. Those are spread across the Sunshine State, but most of them were in central and northern counties, the report noted. Three counties had more than 2,500 in-force homeowners policies, including Alachua, home of Gainesville, with 3,767 policies, and Escambia, in far northwestern Florida, with 2,543.

The insurer also is requesting a 40% rate increase on most of its remaining homeowner policies in Florida, S&P reported. It is one of at least five insurers that are currently asking state regulators for significant rate increases for HO policies.

The losses for Farm Bureau come despite a considerable increase in direct premium. Through the first nine months of 2021, Florida Farm Bureau had $108 million in direct premiums written for its homeowners line, an increase of 10.5% over the same period during the prior year, S&P Global reported. If the trend continued through the end of 2021, that would mark a record-setting year for the company.

Still, the financial losses have mounted and are not a surprise. AM Best rating organization in October downgraded Florida Farm Bureau Casualty Co. from stable to negative, due to the company’s declining surplus in the hurricane-prone state. The decline has been driven in part by underwriting losses from storms, hurricane activity and ongoing pressure from the automobile insurance line of business, the organization said.

United Property & Casualty Insurance, TypTap Insurance and Progressive Insurance also announced recently that they would stop writing new HO or DP-3 policies, or would non-renew many of them.

While a number of insurers report significant financial issues in Florida in recent years, not every carrier is in such dire straits. Universal Insurance Holdings, parent of the largest private insurer in the state, today announced a quarterly dividend and a strengthening of reserves for accident year 2021.