The revised outlooks reflect Farmers’ sustained favorable operating results that outperform the composite average. The revised outlooks further reflect A.M. Best’s expectation that underwriting and operating results will remain strong and continue to strengthen the company’s risk-adjusted capitalization. Over the past five-year period, surplus has grown each year, driven by above-average underwriting performance that has resulted in favorable pure loss ratios and operating return measures that are notably better than the composite average. These results reflect several underwriting and operational strategies that have been in place over many years and are supplemented by a focused enterprise risk management assessment and mitigation process that include a comprehensive reinsurance program. Farmers’ differentiates itself from competitors through its local market knowledge as it serves a specific market that may not meet traditional carrier underwriting requirements. These positive rating factors are partially offset by the company’s geographic concentration of risk, elevated common stock investment leverage and above-average expense ratio.
Any positive rating actions are contingent upon the continuation of the company’s favorable operating performance with organic surplus growth while maintaining strong risk-adjusted capitalization.
Negative rating pressure could occur if the company’s operating performance falls materially short of A.M. Best’s expectations or if there is a material deterioration in overall risk-adjusted capitalization.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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Senior Financial Analyst
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