U.S. farm bureau insurers experienced improved financial performance in 2025, with property and casualty (P/C) insurers returning to underwriting profitability for the first time in five years. Meanwhile, farm bureau life and annuity (L/A) insurers recorded stronger net premium growth than the overall life and annuity industry, marking their first outperformance in this area since 2016, according to a new report from AM Best.
The report, titled “US Farm Bureau Insurers Reverse Direction: P/C Profitable; L/A Premiums Up Slightly,” examines the financial performance, underwriting trends, premium growth and investment strategies of farm bureau insurance organizations across the United States. The findings highlight a recovery in property and casualty underwriting results and continued financial strength among life and annuity insurers.
The positive momentum has extended into the first half of 2026. According to AM Best, property and casualty farm bureau insurers generated nearly $1 billion in underwriting gains during the first six months of the year. This performance puts the segment on track to approach the $2.9 billion in underwriting income reported for the full year in 2025.
Before achieving profitability in 2025, property and casualty farm bureau insurers had last recorded a full-year underwriting gain in 2020. The latest results therefore represent a significant improvement following four consecutive years of underwriting losses.
Farm Bureau Insurers Benefit From Improved Underwriting Conditions
Farm bureau insurers are generally member-owned organizations that operate primarily within individual states. They specialize in insurance products designed for farmers and agricultural businesses while also providing coverage for personal needs, including automobiles, homes and life insurance.
Their state-focused operating models allow them to maintain close relationships with farming communities and understand the insurance requirements of local agricultural producers. However, their concentrated geographic exposure can also create financial challenges when severe weather events affect the regions in which they operate.
According to AM Best, the limited geographic diversification of many farm bureau insurers has historically increased their vulnerability to severe weather losses. Unlike insurance companies operating across a wider range of states and regions, single-state carriers may face greater exposure when storms and other weather-related events affect their primary markets.
Brinda Modi-Shah, senior financial analyst at AM Best, explained that the geographic concentration of farm bureau insurers had made the effects of severe weather particularly significant for the property and casualty segment.
However, underwriting performance began improving during the second half of 2025 as several favorable developments supported profitability. These included stronger insurance rates, continued easing in reinsurance pricing and less severe weather conditions.
The combination of these factors helped insurers improve their underwriting results and contributed to the return to profitability in 2025. According to Modi-Shah, the improvement continued into 2026, suggesting that the segment’s stronger performance was not limited to a single reporting period.
Rate increases have played an important role in helping insurers address the difference between premiums collected and the rising costs of claims. By strengthening rates and improving pricing adequacy, carriers have sought to ensure that premiums more accurately reflect the risks they cover.
More favorable reinsurance pricing has also helped reduce the cost of transferring portions of insurance risk to other insurers. Together, these developments have supported improved underwriting margins.
Premium Growth Slows After Strong Gains
Although property and casualty farm bureau insurers returned to underwriting profitability in 2025, annual premium growth slowed compared with the strong expansion recorded during the preceding two years.
AM Best’s report indicates that insurers had pursued substantial rate-adequacy initiatives as they worked to close the gap between insurance rates and increasing loss costs. These initiatives contributed to significant premium growth in the two years before 2025.
The more moderate growth in 2025 followed this period of pricing adjustments. While premium growth remained an important part of the segment’s financial performance, the improvement in underwriting profitability was a particularly notable development.
For insurers, maintaining an appropriate balance between premium income, claims expenses, operating costs and reinsurance spending remains essential to long-term financial stability. The return to positive underwriting results indicates that farm bureau property and casualty insurers made progress in addressing the pressures that had affected their performance in previous years.
Nevertheless, continued exposure to severe weather and other claims-related risks means that maintaining profitability will depend on insurers’ ability to manage pricing, risk concentration and underwriting discipline.
Life and Annuity Insurers Strengthen Capital Positions
Farm bureau life and annuity insurers also demonstrated favorable financial trends, particularly in capital accumulation and surplus growth.
AM Best reported that the segment’s capital and surplus increased to $8.5 billion in 2025, compared with $5.3 billion in 2015. This represents an increase of approximately 60% over the decade, reflecting the benefits of consistent operating results and stronger financial resources.
The report also indicates that surplus growth continued during the first part of 2026.
Capital and surplus are important measures of an insurer’s financial strength because they help support operations, absorb unexpected losses and provide a cushion against changes in market conditions. Sustained growth in these resources can improve an insurer’s ability to meet policyholder obligations and manage financial risks.
Another important development is the improvement in investment yields among life and annuity farm bureau insurers. Although investment returns have increased steadily, the segment continues to trail the broader life and annuity industry in overall investment yield.
Christopher Lewis, senior financial analyst at AM Best, attributed this difference to the more conservative investment portfolios maintained by farm bureau life and annuity insurers.
These investment strategies can help insurers limit exposure to certain investment risks. However, they can also create challenges when companies need to generate sufficient returns to support the interest credited to policyholders.
Conservative Investment Strategies Create Spread Compression Challenges
Life and annuity insurers depend on investment income to support their insurance obligations and maintain financial performance. The difference between the returns generated by investments and the interest credited to policyholders is an important component of their profitability.
According to Lewis, farm bureau life and annuity insurers face greater spread compression challenges because their conservative investment portfolios generally produce lower yields than those of the overall industry.
Spread compression occurs when the difference between investment earnings and policyholder crediting rates narrows, potentially reducing the income insurers retain from their investment activities.
However, AM Best noted that the effect of spread compression is limited to a smaller portion of the farm bureau segment’s overall business. These insurers have relatively lower exposure to annuities with higher crediting guarantees, reducing the extent to which these pressures affect their total operations.
This business mix provides an important distinction between farm bureau life and annuity insurers and the broader insurance market. While investment returns remain a significant consideration, the composition of their insurance portfolios influences how changes in yields affect financial results.
Ordinary Life Insurance Gains a Larger Share of Business
The report also identifies a significant shift in the business mix of farm bureau life and annuity insurers over the past decade.
Ordinary life insurance accounted for 78% of farm bureau insurers’ business mix in 2025, up from 68% in 2016. This increase demonstrates the growing importance of ordinary life insurance within the segment’s overall operations.
The trend contrasts with the broader life and annuity industry, where business profiles have increasingly shifted toward annuity products.
Differences in product composition can influence insurers’ financial performance, investment requirements and exposure to interest-rate risks. For farm bureau insurers, the larger share of ordinary life insurance and more limited exposure to certain annuity products help explain some of the differences between their operating results and those of the overall industry.
The changing business mix also highlights the importance of understanding individual market segments rather than evaluating all life and annuity insurers as a single group.
AM Best Report Highlights Improving Industry Conditions
The latest AM Best report presents a mixed but generally improving picture of U.S. farm bureau insurance organizations.
Property and casualty insurers have recovered from several years of underwriting losses, supported by stronger pricing, lower reinsurance costs and more favorable weather conditions. Their nearly $1 billion in underwriting gains during the first half of 2026 indicates that positive momentum has continued beyond the strong results recorded in 2025.
At the same time, farm bureau life and annuity insurers have continued to strengthen their capital positions and achieve growth in net premiums. Their $8.5 billion in capital and surplus in 2025, compared with $5.3 billion in 2015, underscores the segment’s long-term financial development.
However, challenges remain. Property and casualty insurers must continue managing geographically concentrated weather risks, while life and annuity insurers must navigate lower investment yields and spread compression pressures.
AM Best’s report, “US Farm Bureau Insurers Reverse Direction: P/C Profitable; L/A Premiums Up Slightly,” provides additional analysis of these trends and the financial performance of the sector.
Readers can access the full report through the AM Best website at:
About AM Best
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 operates in more than 100 countries and maintains regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.
Through its ratings, research and industry analysis, AM Best provides information intended to help market participants evaluate insurers’ financial strength, operating performance and overall position within the insurance sector.
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