Members of the Farm Bureau Property & Casualty Group have seen a 30% drop in surplus through Q2’24 due to significant catastrophe losses, including a major hailstorm in May and a wildfire in June, leading AM Best to downgrade its Issuer Credit Ratings.

As a result, key balance sheet strength metrics have weakened and no longer align with the strongest assessment, prompting a downgrade from “strongest” to “very strong.”

AM Best downgraded the Long-Term Issuer Credit Ratings from “a+” to “a” and affirmed the Financial Strength Rating of A for both Farm Bureau Property & Casualty Insurance Company and Western Agriculture Insurance Company, collectively known as the Farm Bureau Property & Casualty Group. The outlook for these ratings has been revised from stable to negative.

The negative outlook reflects the significant volatility in the group’s operating results in recent years and ongoing pressure on its balance sheet strength.

Since 2022, severe weather events and adverse reserve development have led to high combined ratios and substantial operating losses.

If these operating performance trends continue, the group may fall further out of alignment with other adequately assessed companies.

Management is working to address these challenges by adjusting pricing, increasing minimum deductibles, and refining underwriting strategies. However, the effectiveness of these measures remains uncertain.

“With further deterioration in operating results, and/or continued weakening of policyholders’ surplus and key balance sheet strength metrics, the ratings are likely to be downgraded further,” AM Best concluded.

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