Abstract
Farm Bureau Life And EquiTrust rating was done by A.M Best. The ratings indicate that the company has many factors, which hints at a sound financial status. Nevertheless, it has got few hiccups too. These hiccups are slowing down the growth process but the evaluator has a strong apprehension that the group is sure to remain in unison for years to come.
Company profile:
The Farm Bureau Life and EquiTrust belongs to the parent company, which is known by the name FBL or Farm Bureau Life Financial Group. The FBL Financial Group through the various subsidiaries it owns is engaged in selling casualty, property products. The various life insurance policies sold by the company also include annuities, disability insurance policies and mutual funds. The recipients of the loans mainly comprise the business houses, the ranchers as well as agricultural workers.
Farm Bureau Life And EquiTrust rating was done by the oldest rating agency A.M Best, which was set up in the year 1899. Several parameters were taken into account while the ratings were carried out.
Grades given by A.M Best to the Farm Bureau Life And EquiTrust:
Financial strength of Farm Bureau Life Insurance Company:
The rating for financial strength has been granted grade A or Excellent. An ICR or Issuer Credit Rating of “a+” was allotted to Farm Bureau Life Insurance Company or FB Life. The rating outlook for financial strength as well as ICR was considered as stable.
Financial strength of EquiTrust Life Insurance Company:
A similar rating, namely, A for financial strength and “a+” for issuer credit rating has been assigned to EquiTrust Life Insurance Company also. The rating outlook pertaining to both parameters are negative.
Debt ratings:
As far as debt rating is concerned the parent company Farm Bureau Financial Group Inc was rated as “bbb” pertaining to senior unsecured notes worth $75 million 5.85%, which is due in the year 2014.
The grade “bbb” was also conferred on other senior unsecured notes worth $100 million 5.875%, which is due in the year 2017.
Outstanding debt:
For catering to the outstanding debts of the company, a “fixed coverage ratio” is maintained by the company.
Implications from the Farm Bureau And EquiTrust ratings:
The ratings indicate that the company has earnings, which are positive and consistent. It has capitalization, which is quite favorable. Brand affinity is also very strong. However, there are certain factors, which tend to nullify the positive aspects of the company. The company's assets related to real estate is on the decline. Moreover, the company is also operating in an environment where the rates of interest are low. ICR has been graded negative, which only implies that the dividends are being used up to fund debt clearance of EquiTrust. However, A.M Best has a hunch that the two companies will function in harmony in the years to come. This should be further fostered by the fact that EquiTrust is in a growth process and is gaining prominence gradually.