Oklahoma Farm Bureau ICR outlook revised to negative

By Isha Marathe

June 2 - (The Insurer) - AM Best has revised the outlook to negative from stable for the long-term issuer credit rating of Oklahoma Farm Bureau Mutual Insurance Company and its wholly owned subsidiary AgSecurity Insurance Company.

The rating agency affirmed the financial strength rating of B-plus-plus and the long-term ICR of “bbb-plus”. The outlook on the financial strength rating is stable.

The revision of the long-term ICR outlook to negative from stable reflects pressure on Oklahoma Farm Bureau’s operating performance assessment given multiple years of underwriting losses, which have been affected by frequent and severe weather, inflation and increased reinsurance costs, AM Best said.

As a result, operating performance metrics are no longer closely aligned with other adequately assessed rated carriers.

Additionally, AM Best noted that the group’s limited business profile assessment is indicative of the concentration risk as a single-state writer in the state of Oklahoma, which leaves results susceptible to weather and regulatory risk and the limited business profile assessment reflects its high property lines exposure.

The group is the largest domestic carrier in the state of Oklahoma and controls the largest share of the farm and ranch market in the state.

AM Best assessed the group's balance sheet strength as "very strong".

"While management has and continues to address the deterioration in the group’s operating performance by implementing various corrective actions, including rate increases, and reunderwriting initiatives, the overall effectiveness of these actions remains to be seen," AM Best said.

According to figures from S&P Capital IQ, Oklahoma Farm Bureau wrote $363.1 million of direct premiums in 2023 and produced a 108.4% combined ratio.