AM Best has downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “a” (Excellent) of Louisiana Farm Bureau Mutual Insurance Company (Louisiana Farm Bureau) (Baton Rouge, LA). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Louisiana Farm Bureau’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The rating downgrades reflect a change in AM Best’s assessment of Louisiana Farm Bureau’s operating performance to adequate from strong, following continued volatility in results over the past few years due primarily to severe weather-related events. The company experienced major catastrophe events in 2020 and 2021, which have driven deterioration in key profitability ratios and elevated underwriting losses, ultimately aligning the company’s performance with the adequate assessment. Despite the volatility, substantial efforts have been made related to exposure management, and re-underwriting, which coupled with sizable rate action, is expected to stabilize operating results in the near term.
Louisiana Farm Bureau’s very strong balance sheet continues to be supported by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment portfolio and comprehensive reinsurance program. The business profile assessment reflects the company’s concentration of personal property business in a hurricane-prone state. ERM remains appropriate and in line with the company’s risk profile, with strategies focused on the identification, mitigation and control of risk exposures, especially in the coastal areas of Louisiana.
Source: AM Best
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