AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of FMNE Insurance Company (FMNE) (Lincoln, NE). The outlook of the FSR is stable. In addition, AM Best has revised the outlook to stable from negative and affirmed the Long-Term Issue Credit Rating of “a-” (Excellent) on the $100 million, 9% surplus notes, due 2044.

The Credit Ratings (ratings) reflect FMNE’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The revised Long-Term ICR outlook for FMNE to stable reflects meaningful improvement in the company’s policyholder surplus in recent years, following deterioration in 2022, and to a lesser extent, in 2023, due primarily to weather-related losses. The substantial increase in the company’s surplus during 2024 was mainly influenced by the issuance of $100 million surplus note, as well as positive earnings. However, the sizable increase in surplus in 2025 and first-quarter 2026 was primarily driven by positive earnings, and to lesser degree, capital gains. This favorable trend is expected to continue due to a series of profitability initiatives implemented by management in recent years.

FMNE’s balance sheet strength assessment of strongest is supported by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Additional factors include the company’s favorable liquidity and generally consistent and favorable loss reserve development. In addition, underwriting leverage and reinsurance dependence metrics compare favorably with the private passenger standard auto and homeowners composite averages.

The adequate operating performance reflects the company’s continued underwriting discipline. The deteriorating results for 2022 largely stemmed from weather-related events. However, the company’s operating results began to show improvement in 2023 that continued through the first quarter of 2026, driven by management’s initiatives that were implemented in recent years to enable a return to profitability. Some of those initiatives include significant rate increases, tighter underwriting guidelines, mandatory wind and hail deductible increases, reduction in high exposure areas and systems transformation.

The neutral business profile continues to focus on the company’s market-leading position in the personal lines business in its core states of Nebraska and South Dakota. The company has a long-standing and well-established market presence with considerable knowledge and influence in its operating territory. The company’s property- and geographic-focused book exposes FMNE to weather-related events; however, the company maintains a comprehensive reinsurance program to mitigate significant losses stemming from these events.

The company’s ERM program is considered appropriate for its risk profile and includes prudent reinsurance protection with comprehensive risk mitigation strategies. The ERM program is governed by the board of directors and led by the company’s president, who is responsible for establishing and maintaining a risk framework, as well as providing risk oversight for departmental managers. Qualitative and quantitative tolerance statements have been developed, which are specifically geared toward the preservation of policyholder surplus.

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