Best’s News & Research Service - June 08, 2018 09:51 AM (EDT)
A.M. Best Affirms Credit Ratings of Farm Bureau Life Insurance Company
- June 08, 2018 09:51 AM (EDT)
Oldwick //BestWire// - A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” of Farm Bureau Life Insurance Company (FBL). Concurrently, A.M. Best has affirmed the Long-Term ICR of “bbb+” of FBL Financial Group Inc. [NYSE:FFG], the holding company of FBL. The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in West Des Moines, Iowa.
The ratings reflect FBL’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
FBL’s ratings also reflect its very strong risk-adjusted capitalization, solid liquidity profile and its positive and above-industry-average profitability metrics. FBL maintains an investment portfolio of good overall quality with limited use of reinsurance and no utilization of captives. Capital trends remain favorable primarily due to continued organic earnings growth net of dividends, although statutory capital declined modestly in 2017, attributable to a write-down of deferred tax assets because of tax reform. FBL also benefits from good penetration of life/annuity sales within its multiline distribution system, with strong cross-sell rates that are consistently very favorable when benchmarked against industry experience. Additionally, financial and operating leverage at the holding company is modest with strong interest coverage ratios.
Partially offsetting rating factors include continued spread compression as FBL has a sizable percentage of annuity and ordinary life business in force at guaranteed minimum crediting rates, although overall spreads have remained adequate due to solid investment yields. Additionally, a high percentage of the annuity liabilities lack surrender charge protection, which exposes the company to some disintermediation risk if there is a rapid increase in the interest rate environment. Finally, while FBL has strong branding and distribution channels, its business profile is regional with a concentration in the Midwest and Western rural regions of the United States.
This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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