OLDWICK, N.J.–()–AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “b+” (Marginal) from “b” (Marginal) and affirmed the Financial Strength Rating (FSR) of C++ (Marginal) of Farmers Mutual Insurance Company of Michigan (FMIC) (Coldwater, MI). The outlook of the Credit Ratings (ratings) is stable.
The ratings reflect FMIC’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, very limited business profile and marginal enterprise risk management.
The Long-Term ICR upgrade reflects a trend of improved operating performance metrics compared with prior periods, and a reduction in underwriting performance volatility relative to historical levels.
FMIC’s balance sheet strength is assessed as adequate due to strong risk-adjusted capitalization, elevated reinsurance dependence metrics and limited financial flexibility and scale of operations. FMIC’s business profile is assessed as very limited due to its business concentration in Michigan and highly competitive marketplace with low barriers to entry for competitors in its primary lines of business. FMIC’s ERM is assessed as marginal due to an evolving risk management framework.
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