OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable for the Long-Term Issuer Credit Ratings (Long-Term ICRs) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICRs of “bbb+” (Good) of South Carolina Farm Bureau Mutual Insurance Company (Cayce, SC) and its reinsured affiliate, Palmetto Casualty Insurance Company (Cayce-West Columbia, SC). The outlook of the FSR is stable. Both companies are collectively referred to as South Carolina Farm Bureau Group (SCFBG).
The Credit Ratings (ratings) reflect SCFBG’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The negative outlook on the Long-Term ICRs reflects volatility in the group’s key operating performance metrics in recent years, as well as year to date. SCFBG has experienced higher-than-average loss activity associated with frequent and severe weather-related events, as well as increased fire losses and inflationary pressures on rising loss costs. Results were particularly impacted by a substantial hail event in April 2024, which combined with additional storm activity in May and June, is expected to adversely affect second quarter and year-end 2024 results. The stable outlook on the FSR reflects SCFBG’s overall level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, remaining at the strongest level despite the anticipated reduction in capital through second-quarter 2024.
Management continues to address the volatile results by emphasizing pricing adequacy through rate increases, enhancing its in-house property inspection program, adjusting deductibles and implementing actual cash value endorsements, as well as non-renewing risks that fail to meet its underwriting criteria. SCFBG also continues to employ appropriate exposure management techniques because of its risk concentration in a coastal state. Still, the efficacy of these actions in improving overall operating results remains to be seen. Should further deterioration occur, and operating performance metrics no longer align with the adequate assessment, the ratings could be downgraded.
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