A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of B+ (Good) and issuer credit rating of 'bbb-' of Farmers Insurance Company of Flemington (Farmers) (Flemington, NJ).
The revised outlook for Farmers reflects the reduced exposure that its risk-adjusted capitalization has to equity market volatility going forward. Over the past several years, the company reduced its significant holdings of common stock to comply with the New Jersey legislation passed in 2008 limiting equity investments, which was followed by revision of Farmers' investment strategy and portfolio allocation that emphasizes fixed income investments.
Farmers' ratings recognize its adequate capitalization, generally favorable operating performance and local market expertise, which are offset by the company's unfavorable loss reserve development trends and geographic concentration of risks in New Jersey.
As a property-predominant writer in New Jersey, Farmers' surplus remains exposed to adverse legislative actions, regulatory decisions and severe weather conditions.
For Best's Credit Ratings, an overview of the rating process and rating methodologies: ambest.com/ratings.
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