Farmers Insurance Group's Positive Credit Ratings Upgrade by AM Best

AM Best has upgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) for Farmers Insurance Group, moving the outlook from stable to positive, while maintaining its Financial Strength Rating (FSR) of A (Excellent).

This shift in ratings underscores Farmers Insurance Group’s robust balance sheet and adept enterprise risk management. AM Best’s update comes on the heels of Farmers’ underwriting profitability and sustained investment income, leading to a significant organic surplus growth. Moreover, strategic pricing actions and disciplined expenses have contributed to the carrier's stronger competitive position. While the Financial Strength Rating remains stable, these improvements in Long-Term ICR highlight a positive outlook for the group's future performance.

Farmers Insurance Group’s Financial Position

Farmers Insurance Group showcases a very strong balance sheet that reflects optimal risk-adjusted capitalization, consistent surplus growth, a conservatively managed investment portfolio, and a comprehensive reinsurance approach. Key to the improvement in operating performance are strategic pricing measures and updated risk management strategies, which have fueled enhanced underwriting oversight and product modifications. Despite these advancements, the group faces ongoing challenges, particularly in managing catastrophe loss exposure and its reliance on surplus notes worth approximately $2 billion.

Details on Issuer Credit Ratings

• Farmers Insurance Exchange has a Long-Term IR of “bbb+” (Good) on USD 400 million 4.747% surplus notes due in 2057.
• USD 300 million 7.00% surplus notes due in 2064 are also rated with a “bbb+” outlook.
• Farmers Exchange Capital holds a Long-Term IR of “bbb+” on USD 500 million 7.05% surplus notes due in 2028.
• USD 138.5 million outstanding on USD 150 million 7.2% surplus notes due in 2048 and USD 335 million 6.151% surplus notes due in 2053 maintain similar ratings.
• USD 500 million 5.454% surplus notes due in 2054 complete the positive rating outlook across the board.

Thus, AM Best recognizes Farmers Insurance Group's strong financial health and strategic management practices, translating to greater confidence in the group's future financial trajectory. With AM Best's global reputation as a leader in insurance sector ratings, this upgrade is a vital indicator of the group's market resilience and adaptability in evolving risk environments.