A.M. Best has upgraded the issuer credit rating (ICR) to “a+” from “a” and revised the outlook to stable from positive for Farmers Union Mutual Insurance Company (FUMI) (Jamestown, ND). Concurrently, A.M. Best has affirmed FUMI’s financial strength rating (FSR) of A (Excellent). The outlook for the FSR remains stable.
The upgrade to the ICR is a reflection of FUMI’s consistently favorable operating results, consistent surplus appreciation and favorable reserve development. Profitability is driven by favorable underwriting results and positive net income that has been reported for five consecutive years and continues in 2015. Management continuously sets forth initiatives to maintain profitability including base deductible changes, enhancing agent training, technological advances, and focusing on insurance to value. Risk-adjusted capitalization is solid and very supportive of the ratings. In addition, loss reserves are repeatedly redundant on an accident-and calendar-year basis.
Partially offsetting these positive factors are the company’s geographic concentration in North Dakota and property-predominant focus. The company’s single-state concentration and focus on property business leaves surplus susceptible to adverse weather conditions, as well as changes in competition, and in the judicial and legislative environment.
Further positive rating action is unlikely at this rating level. Negative rating action may follow a sudden, unexpected and material decline in risk-adjusted capitalization or a sustained deterioration in operating performance.
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 visit A.M. Best’s Ratings & Criteria Center.
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