AM Best Downgrades Issuer Credit Rating of Kentucky Farm Bureau Group Member; Revises Outlooks to Negative

AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “a+” (Excellent) and affirmed the Financial Strength Rating of A (Excellent) of Kentucky Farm Bureau Mutual Insurance Company (KFB Mutual) (Louisville, KY). which is part of Kentucky Farm Bureau Group (KFB). The outlook of these Credit Ratings (ratings) has been revised to negative from stable.

The ratings reflect KFB’s balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.

The downgrade of the Long-Term ICR reflects a revision of the group’s operating performance assessment to marginal driven by significantly elevated loss activity over the past two years, with this trend continuing in first-quarter 2023. KFB Mutual has been impacted by severe tornado activity, catastrophic floods and inflationary pressures with elevated frequency and severity of loss. As a single-state writer with correlating lines of business and an inherent exposure to weather-related events, a moderate degree of underwriting volatility is to be expected. However, the magnitude of recent volatility relative to industry norms is elevated.

The negative outlooks reflect pressure on the current neutral business profile assessment given the aforementioned deterioration in KFB Mutual’s operating performance metrics and high levels of volatility due to its geographic concentration. While management continues to address the deterioration in operating performance by implementing various corrective actions including rate increases, product changes and reunderwriting initiatives, the overall effectiveness of these actions in managing the group’s high level of concentration remains to be seen.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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