• Credit agency AM Best placed Florida Farm Bureau Group’s credit ratings under review with negative implications, affecting its Financial Strength Rating of B++ and Long-Term Issuer Credit Ratings of “bbb+.”
• The review was largely attributed to financial losses exceeding the catastrophe retention level due to Hurricane Idalia. This event, combined with increased net premiums from rate activity, led to higher underwriting leverage and reduced risk-adjusted capitalization.
• According to a prepared statement put forth by AM Best, Florida Farm Bureau’s management is implementing strategies to rebuild surplus and address underwriting leverage, including rate increases and business refinements.

Credit rating agency AM Best announced on Friday that the credit ratings of Florida Farm Bureau Group, comprising Florida Farm Bureau Casualty Insurance Company and its fully reinsured subsidiary, Florida Farm Bureau General Insurance Company, are under review with negative implications.

The decision affects the Group’s Financial Strength Rating of B++ and Long-Term Issuer Credit Ratings of “bbb+” and follows a decline in key balance sheet strength metrics as of September 30, 2023, according to the agency.

AM Best largely attributes the review placement to losses following the landfall of Hurricane Idalia, which exceeded Florida Farm Bureau Group’s catastrophe retention level. This, coupled with increased net premiums due to rate activity, has led to a rise in underwriting leverage and a drop in risk-adjusted capitalization, AM Best said.

“Erosion in policyholders’ surplus through this time was driven primarily by loss activity from Hurricane Idalia, which exceeded Florida Farm Bureau Group’s occurrence catastrophe retention level,” said the credit agency. “Surplus volatility concurrent with ongoing increases in net premiums written due to rate activity has resulted in elevated underwriting leverage measures, as well as a notable drop in the group’s overall level of risk-adjusted capitalization.”

In response, Florida Farm Bureau’s management is implementing various capital management strategies to rebuild surplus and address the elevated underwriting leverage, including rate increases, refining their book of business, and leveraging recent legislative changes in Florida’s property insurance market, according to a prepared statement.

AM Best will maintain the ratings under review with negative implications until it can fully assess the impact of the outlined management plans and warns that if they do not yield results or fail to significantly improve the key balance sheet strength metrics, further negative rating actions could follow.