FMNE Insurance credit outlook revised to stable by AM Best

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Dan Blystone

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FMNE Insurance credit outlook revised to stable by AM Best — FMNE outlook upgraded

FMNE Insurance Company secures a more favorable credit outlook after a period of weather-driven pressure on capital and earnings. The revision reflects stronger policyholder surplus growth through 2025 and the first quarter of 2026, alongside rating affirmations on the insurer and its surplus notes.

Highlights

AM Best revised FMNE Insurance Company’s credit outlook to stable from negative and affirmed its Financial Strength Rating of A (Excellent) and a+ (Excellent) Long-Term Issuer Credit Rating.
FMNE's policyholder surplus recovery in 2024 was driven mainly by a $100 million, 9% surplus note issuance and positive earnings, with further increases expected in 2025 and Q1 2026.
Operating performance improved through significant rate hikes, tighter underwriting, higher deductibles, and exposure reduction in high-risk areas, strengthening FMNE's personal lines position in Nebraska and South Dakota.

Rating action and capital recovery

As reported by AM Best, the rating agency has revised the outlook to stable from negative for FMNE Insurance Company’s Long-Term Issuer Credit Rating and affirmed its Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating of a+ (Excellent). It also has revised the outlook to stable from negative and affirmed the a- (Excellent) Long-Term Issue Credit Rating on the company’s $100 million, 9% surplus notes due 2044.

AM Best says the ratings reflect FMNE’s balance sheet strength, which it assesses as strongest, as well as adequate operating performance, a neutral business profile and appropriate enterprise risk management. The agency says the outlook change follows meaningful improvement in policyholder surplus after deterioration in 2022 and, to a lesser extent, in 2023, when weather-related losses weighed on results.

The company’s surplus increase in 2024 is mainly influenced by the issuance of the $100 million surplus note and by positive earnings. AM Best says the further sizable increase in 2025 and the first quarter of 2026 is driven primarily by positive earnings, with capital gains also contributing, and it expects that favorable trend to continue as profitability initiatives remain in place.

Underwriting discipline supports regional position

AM Best says FMNE’s strongest balance sheet assessment is supported by risk-adjusted capitalization at the highest level under Best’s Capital Adequacy Ratio, along with favorable liquidity and generally consistent loss reserve development. The agency adds that underwriting leverage and reinsurance dependence compare favorably with private passenger standard auto and homeowners composite averages.

The insurer’s operating performance remains supported by underwriting discipline, even though 2022 results deteriorated largely because of weather-related events. AM Best says results begin improving in 2023 and continue improving through the first quarter of 2026, helped by significant rate increases, tighter underwriting guidelines, higher mandatory wind and hail deductibles, reduced exposure in high-risk areas and systems transformation.

FMNE continues to focus on its market-leading personal lines position in Nebraska and South Dakota. AM Best says that geographic and property concentration leaves the insurer exposed to weather-related events, but that risk is moderated by a comprehensive reinsurance program and an enterprise risk management framework overseen by the board and led by the company’s president.

Our earlier report on The Methodist Hospitals’ outlook revision explained that the shift to Stable from Negative was supported by stronger supplemental Medicaid DSH payments and expectations that this funding will remain in place. We noted that while low debt and supportive liquidity underpin the 'BBB-' rating, operating recovery is still uneven due to weak revenue defensibility and a government-heavy payor mix, leaving the outlook reliant on gradual margin and liquidity improvement.

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