Ratings of Kansas’ Farmers Alliance Mutual Insurance, Subsidiaries Upgraded

December 13, 2019

AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” from “a-” of McPherson, Kansas-based Farmers Alliance Mutual Insurance Co. and its wholly-owned subsidiaries, Alliance Indemnity Co. and Alliance Insurance Co. Inc. The group is collectively referred to as Farmers Alliance Companies.

The outlook of the ratings has been revised to stable from positive.

The majority of the group’s business centers on the farming communities of rural America. In 2019, the group introduced a new strategic plan, following the appointment of Brian Lopata as CEO in 2018. The plan was constructed with input from employees at all levels and aims to improve upon many of the factors that have led to the group’s recent success.

A regional insurer, Farmers Alliance was founded in 1888 and now writes more than $185 million of premium through independent insurance agents in Colorado, Idaho, Kansas, Montana, Nebraska, North Dakota, Oklahoma and South Dakota, according to information on the company’s website.

While farm insurance represents more than 50% its business, Farmers Alliance also offers personal and commercial insurance products.

AM Best said the ratings for Farmers Alliance Companies reflect their balance sheet strength, which AM Best categorizes as strongest, as well as their adequate operating performance, neutral business profile and appropriate enterprise risk management.

The rating upgrades reflect the stabilization in the group’s underwriting performance, which has produced sustained profitability following underwriting actions in prior years. These actions included new exposure mitigation techniques, improved rate granularity and risk management processes. As a result of these changes, the group’s most recent five-year average return measures track closely with composite averages.

Additionally, the group’s five-year measures of combined and operating ratios compare favorably with the private passenger standard auto and homeowners composite. Further, the group has reported favorable pre-tax operating gains and net income for five consecutive years.

Farmers Alliance Companies has tightened underwriting guidelines without radical changes to its niche profile as an insurer of midwestern farms, AM Best said.

Source: AM Best

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