A.M. Best Upgrades Credit Ratings of Farm Bureau Mutual Insurance Company of Michigan and Farm Bureau General Insurance Company of Michigan

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has upgraded the Financial Strength Ratings (FSR) to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” from “bbb+” of Farm Bureau Mutual Insurance Company of Michigan and Farm Bureau General Insurance Company of Michigan, which are members of the Michigan Farm Bureau Group (Group). The outlooks of these Credit Ratings (ratings) have been revised to stable from positive. Both companies are domiciled in Lansing, MI.

The rating upgrades are based on the Group’s improved risk-adjusted capitalization and operating performance in recent years, following management’s implementation of numerous strategic initiatives, in conjunction with more favorable weather patterns.

The ratings reflect the Group’s strong risk-adjusted capitalization, favorable five-year operating performance and sound business profile in Michigan, generated by actions to improve profitability and reduce risk. The ratings favorably recognize the Group’s improved operating performance in recent years and its affiliation with the Michigan Farm Bureau. Partially offsetting these favorable rating factors are the Group’s unfavorable underwriting results in the beginning of the recent five-year period and its primarily single-state concentration of risk in Michigan.

The Group is the leading provider of farmowners insurance in Michigan. This position was achieved through strong customer service-oriented business practices; the ability to cross-sell its property/casualty insurance products with life insurance products from a sister company; product distribution through a captive agency force; and affiliation with the Michigan Farm Bureau, which facilitates marketing and provides access to its members. Additionally, management continues to take actions to improve earnings by tightening underwriting standards, increasing rates and pricing segmentation, and continuing a home inspection program and incentive programs for agents.

These positive rating factors are offset partially by unfavorable underwriting results in the beginning of the recent five-year period. These were primarily the result of competitive pricing, a deteriorating risk profile and weather-related events. Partially contributing to these results is the Group’s single-state concentration of risk in Michigan. This single-state concentration exposes it to greater risk from severe localized storms, strong competitive pricing pressure, changes in the regulatory and legislative environments, and changes due to judicial rulings, as well as in economic conditions specific to Michigan.

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.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Kenneth Tappen, +1 908 439 2200, ext. 5248

Senior Financial Analyst

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or

Richard Attanasio, +1 908 439 2200, ext. 5432

Senior Director

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or

Christopher Sharkey, +1 908 439 2200, ext. 5159

Manager, Public Relations

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or

Jim Peavy, +1 908 439 2200, ext. 5644

Director, Public Relations

[email protected]

Source: A.M. Best