Best in the morning The Outlook on the Long-Term Issuer Credit Rating (Long-Term ICR) has been revised to Stable from Negative and Lincoln, Nebraska-based FMNE Insurance Company’s Financial Strength Rating (FSR) has been affirmed at A (Excellent) and the Long-Term ICR at “a+” (Excellent).
The outlook for FSR is stable. Additionally, AM Best revised the outlook to stable from negative and affirmed the long-term issuance credit rating of $100 million of 9% surplus notes due 2044 at “a-” (outstanding).
The Credit Rating (Rating) reflects FMNE’s balance sheet strength (assessed as strongest by AM Best), as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
FMNE’s long-term ICR outlook has been revised to stable, reflecting the company’s policyholder surplus improving significantly in recent years and deteriorating primarily in 2022 and 2023 due to weather-related losses and, to a lesser extent, deterioration.
The significant increase in the company’s earnings in 2024 is mainly affected by the issuance of US$100 million in surplus notes and positive earnings. However, the sharp rise in earnings in the first quarter of 2025 and 2026 will be driven primarily by positive earnings and, to a lesser extent, capital gains. This favorable trend is expected to continue as management has implemented a series of profitability initiatives in recent years.
FMNE’s risk-adjusted capital is among the strongest, as measured by Best’s Capital Adequacy Ratio (BCAR), which supports FMNE’s balance sheet strength assessment as the strongest. Other factors include the company’s good liquidity and generally consistent and favorable loss reserve development. Additionally, underwriting leverage and reinsurance dependence metrics outperform the combined private passenger standard auto and homeowner averages.
The strong operating results reflect the company’s continued underwriting discipline. Much of the deterioration in performance in 2022 stems from weather-related events.
However, the company’s operating results began to improve in 2023 and continued into the first quarter of 2026, driven by initiatives implemented by management in recent years to restore profitability. Some of these initiatives include significant rate increases, tightened underwriting guidelines, mandatory increases in wind and hail deductibles, reduction of high-risk areas and system transformation.
The neutral business profile continues to focus on the company’s market-leading position in the personal lines business in the core states of Nebraska and South Dakota.
The company has a long-standing and well-established market presence, with extensive knowledge and influence in the areas in which it operates. The company’s real estate and geography-focused books expose FMNE to weather-related events; however, the company maintains a comprehensive reinsurance program to mitigate significant losses from these events.
The company’s enterprise risk management program is considered appropriate for its risk profile and includes prudent reinsurance protection and comprehensive risk mitigation strategies. The ERM program is managed by the Board of Directors and led by the company’s President, who is responsible for establishing and maintaining the risk framework and providing risk oversight to unit managers. Qualitative and quantitative tolerance statements have been developed specifically to protect policyholder surplus.
Source: AM Best
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