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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 23, 2016 12:23 PM (EDT)
A.M. Best has revised the outlooks to positive from stable and affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-” of Farmers Mutual Fire Insurance Company of McCandless Township (Farmers) (Wexford, PA).
The revised outlooks reflect Farmers’ consistent profitability and strong operating results, which outperform the composite average. Over the past five-year period, surplus has grown each year, driven by better-than-average underwriting performance that allowed the company to report operating returns notably higher than the composite average, although declining net investment income has tempered total returns. The initiatives driving the profitability trends include rate increases, greater use of inspections and expense management strategies. Although the majority of business is homeowners and dwelling/fire in Western Pennsylvania, Farmers also writes in the niche market of small commercial business, which provides the company some product diversification. Farmers believes that the small commercial business segment is underserved in their operating territory and has good potential for profitable growth. These positive rating factors are partially offset by Farmers’ property focus in Pennsylvania and above-average reinsurance dependence. The reinsurance, however, is with highly rated carriers and is in place to help mitigate against weather-related events that could cause significant losses.
Positive rating movement is possible if the company sustains favorable underwriting and operating results while maintaining adequate risk-adjusted capitalization. The ratings could be negatively impacted if prolonged deterioration in underwriting and operating results were to occur, causing a significant erosion of risk-adjusted capitalization.
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.