AM Best revises Farmers Fire outlook to negative as surplus loss pressures capital
Farmers Fire Insurance Company faces a negative outlook on its Long-Term Issuer Credit Rating after a material decline in policyholder surplus weakened its balance sheet assessment. AM Best still affirms the insurer’s B++ Financial Strength Rating and “bbb+” Long-Term Issuer Credit Rating, while keeping the Financial Strength Rating outlook stable.
Highlights
- AM Best revised Farmers Fire's Long-Term Issuer Credit Rating outlook to negative from stable, affirming its Financial Strength Rating at B++ and 'bbb+'.
- Farmers Fire's policyholder surplus dropped 16.5% in 2025 due to weather-related losses, increasing leverage measures and pressuring capital.
- Management initiated rate increases, stricter underwriting, and reinsurance program restructuring, with significant savings expected from 2026 onward.
Rating action and capital pressure
As reported by AM Best, the rating agency revises the outlook to negative from stable for Farmers Fire’s Long-Term Issuer Credit Rating and affirms its Financial Strength Rating of B++ and Long-Term Issuer Credit Rating of “bbb+”. The company is based in York, Pennsylvania, and the outlook for its Financial Strength Rating remains stable.AM Best says the ratings reflect Farmers Fire’s strong balance sheet strength, adequate operating performance, limited business profile and appropriate enterprise risk management. The agency also says its balance sheet strength assessment is revised to strong from very strong.
Weather losses drive outlook change
The negative outlook reflects pressure on the insurer’s capital position following a material loss of policyholder surplus in 2025. AM Best says the 16.5% surplus decline stems from weather-related losses that remain within the company’s reinsurance retention and increase leverage measures.Management implements measures aimed at improving underwriting performance, including rate action, tighter underwriting guidelines and a restructuring of the reinsurance program. Those steps are expected to produce significant savings starting in 2026.
In our earlier coverage of the Purdue University/CME Group Ag Economy Barometer, we noted that U.S. farmers’ sentiment weakened in May as high input costs and tight margins continued to strain near-term conditions. The survey showed a drop in appetite for major capital investments, even as farmland value expectations held up, highlighting how cost pressure is reshaping financial decisions across the farm economy.
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