AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Farmers Mutual Fire Insurance Company of McCandless (Farmers) (Butler, PA).

These Credit Ratings (ratings) reflect Farmers’ balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

The change in outlook to negative from stable is primarily driven by the deterioration in 2025 operating results due to increased fire losses and weather-related events. Farmers’ has experienced increased frequency and severity of losses, and because of rising loss costs in recent years, the company’s incurred losses significantly increased in 2025. In addition, the company’s reinsurance retention increased resulting in additional costs that the company had to absorb during the year. Management has implemented rate increases and various underwriting initiatives to help offset volatility in operating results; however, the effectiveness of these initiatives remains uncertain at this time.

Farmers limited business profile reflects its high geographic concentration as a property writer in Western Pennsylvania exposing the company to localized weather events and severe fire, as well as judicial and regulatory challenges. The company's susceptibility to weather-related events is partially mitigated through a comprehensive reinsurance program; however, reinsurance costs and retentions have increased in recent years.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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