AM Best has upgraded the financial strength rating of Farm Mutual Reinsurance Plan Inc. to A- (Excellent) from B++ (Good), restoring the reinsurer to the rating tier it held before a 2022 downgrade. The agency also raised the long-term issuer credit rating to "a-" from "bbb+" and revised the outlook to stable from positive.
The move caps a recovery effort that began after AM Best downgraded Farm Mutual Re in July 2022, citing four consecutive years of underwriting losses tied to weather events and five-year combined ratios well above the industry composite at the time.
AM Best said the upgrade reflects an improved operating performance assessment, moving to adequate from marginal. The agency credited a strategic plan Farm Mutual Re launched in 2020 to rebuild underwriting profitability across its member and broker segments, including tighter risk selection, rate increases and stricter expense management.
That plan has produced four consecutive years of underwriting profitability. AM Best expects results to hold near the current assessment, though it flagged continued exposure to catastrophe-driven volatility given the company's reinsurance business. The company's turnaround has already been recognized once before: AM Best moved Farm Mutual Re's outlook to positive in July 2025, citing its strongest year on record in 2024, with net income of US$105.2 million.
Farm Mutual Re, established in 1959, is the exclusive reinsurer for 42 members in Canada, per AM Best's release, accepting each insurer's full reinsurance program. Its broker segment markets reinsurance contracts primarily to regional US mutual insurers, with smaller exposures in Canada, the UK, Europe, Japan, India, Australia and Turkey. The company also owns United General Insurance Corporation, a Fredericton, New Brunswick-based auto insurer acquired in 2019.
The upgrade comes as the broader Canadian catastrophe reinsurance market shifts direction. Guy Carpenter's 2026 executive outlook for Canada projects a softening property catastrophe reinsurance market this year, reversing several years of firm-to-hardening conditions. The shift reflects favorable global reinsurer performance and limited catastrophe losses in 2025, allowing insurers to purchase broader protection at lower risk-adjusted cost rather than facing further coverage reductions or significant price increases.
Morningstar DBRS has separately said Canadian insurers remain well positioned to absorb moderate wildfire losses, although significant catastrophe activity could increase pressure on earnings and capital while leading insurers to draw on reinsurance protections.
