Farmers Life Insurance Company (Farmers Life) has a Financial Strength Rating (FSR) of B++ (Good) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) from AM Best. These Credit Ratings (ratings) have a stable outlook.
Farmers Life’s ratings reflect its strong balance sheet, as assessed by AM Best, as well as its adequate operating performance, limited business profile, and appropriate enterprise risk management. Farmers Life intends to grow its insurance and reinsurance business by writing direct and reinsuring fixed annuity business, with a focus on multiyear guaranteed annuities, fixed indexed annuities, and guaranteed investment contracts.
In April 2022, the company began selling its multiyear guaranteed annuity product through independent marketing organisations, with an initial favourable premium growth of slightly more than $40 million through the third quarter of 2022. The company is currently licenced in 19 states, including Texas, Ohio, and Pennsylvania, with state approvals in five more jurisdictions pending.
Farmers Life’s strategy is largely driven by an unconventional investment portfolio that invests more than half of its assets in commercial and residential mortgage loans for increased yield. This preference for real estate risk over a traditional bond-heavy portfolio stems from the experience of Farmers Life’s ultimate owners, members of the Jacobs Family, who collectively own a privately held real estate company that owns and manages over $1 billion in real estate.
While Farmers Life currently has a favourable risk-adjusted capital position, as measured by Best’s Capital Adequacy Ratio (BCAR), and a balance sheet strength assessment of strong, AM Best notes that as the company scales up operations, it will likely face significant competition from larger established players in the space. Farmers Life will also need to closely monitor the relationships of contracted third-party service providers in order to manage non-core operations such as legal, compliance, administration, marketing, and asset management.
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