AM Best Downgrades Credit Rating of Louisiana Farm Bureau Mutual

June 18, 2024

AM Best announced it has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb” (Good) from “a-” (Excellent) of Louisiana Farm Bureau Mutual Insurance Company, based in Baton Rouge. The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect Louisiana Farm Bureau’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect deterioration in Louisiana Farm Bureau’s key balance sheet strength and operating return metrics, which have come in the form of policyholder’s surplus erosion and declining levels of risk-adjusted capitalization, AM Best said.

In addition, AM Best found that operating performance has trended downward over the past few years and was adverse particularly in 2023.

“The volatility has stemmed predominately from much higher reinsurance costs over the past several years following catastrophe loss activity from Hurricanes Ida, Laura and Delta,” AM Best said.

The ratings agency also cited inflationary pressures on loss costs and convective storm activity over the past few years as contributors to the company’s financial deterioration. As a result, the company’s five-year average operating return metrics have fallen materially relative to the personal property industry composite. Surplus has also fallen in four out of the past five years, with the largest decline occurring in 2023.

Source: AM Best

Topics Louisiana Agribusiness AM Best

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