Farm Bureau Insurance Reports Growth in 2018; Emphasis on People, Business Fundamentals

Farm Bureau Insurance of Tennessee experienced growth and profitability in 2018 as the companies continue to emphasize personal customer relationships and insurance business fundamentals during a time of technology change, officials said Thursday.

Farm Bureau Insurance’s property and casualty operations increased premium at an annualized rate of 7 percent, the largest increase since 2003. The P&C operation posted a profitable combined expense and loss ratio of 86.5 percent. The life insurance company posted net income of $46.7 million and increased its capital and surplus by $19.7 million.

Dividends to company shareholders and increased stock valuations were announced at the Farm Bureau Insurance annual meeting in Franklin.

Chief Executive Officer Jeff Pannell noted the disruptive effects of technology-based startup insurance companies, which place emphasis on quick sales and make promises about fast claims settlements. While Farm Bureau Insurance is investing in technological innovations to improve customers’ digital experience, the fundamentals of the insurance business cannot be ignored, Pannell said.

For the startup companies, “it is all about the buying experience, but I believe there is more to insurance than selling a policy,” Pannell said, noting that he was “curious to see how they would handle a storm event like we had in 2011.” A series of violent storms in 2011 resulted in $1.5 billion in catastrophic losses for Farm Bureau Insurance.

“Our claims and agency force are the two strongest assets we have. They are what allows our company to service everything from the major storms that impact our state to life’s everyday events,” Pannell said.

Farm Bureau Insurance of Tennessee is the trade name for the group of companies including Tennessee Farmers Mutual Insurance Company, Tennessee Farmers Assurance Company and Tennessee Farmers Life Insurance Company.  Headquartered in Columbia, Tenn., the companies provide insurance services for members of the Tennessee Farm Bureau Federation.

Stock prices rise, dividends voted

Based on the year’s outcomes, the stock price for Tennessee Farmers Life was announced at $57.11 per share. The company’s directors voted a 2 percent dividend and offered to purchase up to 200,000 shares. Stockholder equity increased 2.4 percent over the previous year.

Tennessee Farmers Assurance Company’s stock price was announced at $23.53 per share. The directors authorized a 3 percent dividend and the purchase of up to 200,000 shares. Stockholder equity increased 8 percent year-over-year.

P&C combines sales with expense control for positive results

Property and Casualty Operations posted gains in policy and unit growth. Farm Bureau Insurance now covers 1.89 million vehicles and properties in Tennessee, said P&C Operating Officer John Law.

At 22.8 cents of each premium dollar, expenses continue to be a key difference between the P&C operation and the competition, Law said. Other Farm Bureau companies spend 33.3 cents on expenses, while the industry as a whole is estimated to spend 38.5 cents. Auto and property losses were 63.7 percent for a profitable combined ratio of 86.5 percent. As a result, $179 million was added to surplus, which at the end of 2018 stood at $2.79 billion.

Customer loyalty remained strong, with automobile retention at 97 percent, farmowner at 94.7 percent, and homeowner at 91.3 percent.

As part of the P&C report, Claims Vice President Michelle Burns featured her staff of 400 who work in 16 regional claims centers across the state. The Claims Department handled more than 170,000 claims in 2018 at a cost of nearly $900 million. “During a time when everything is digitized and automated, we are still in the people business,” Burns said. “People still expect a real live person to talk to them about their loss. They want someone to guide them through the process.”

Life Company posts gains

A combination of new life insurance products and agent productivity provided positive results for Tennessee Farmers Life Insurance Company, said David Bell, chief operating officer for Life Operations.

TFLIC agents wrote nearly 46,000 insurance applications for nearly $4.7 billion in face value, and more than 1,700 annuity applications. The life company now has $37.6 billion in force, an increase of 3.9 percent over 2017. 

The company’s sales force averaged 96 life and annuity applications per agent. Agents sold more than 3,000 of the company’s new Safeguard whole life policies for $6.7 million in premium. Total assets grew to $2.3 billion, a 1 percent increase.

The company’s mortality experience was 52.2 percent of expected, falling within the company’s ongoing goal of 65 percent. During 2018, Tennessee Farmers Life paid more than 1,500 death claims for $71.8 million.

About the ‘Farm Bureau Insurance of Tennessee’ companies

Tennessee Farmers Mutual was founded in 1948 to insure automobiles, homes, farms and personal property. Tennessee Farmers Assurance is a stock company established in 1991 to provide additional capital for the property and casualty operations, and to give investors an equity opportunity linked to the mutual company’s success. Tennessee Farmers Life is a stock company founded in 1973 to sell life insurance.

The property and casualty company insures more vehicles and properties than any other insurer in Tennessee, and the life company is the state’s second largest writer of individual life insurance.

Coverage is available to Farm Bureau members at 193 locations throughout the state; all Tennessee residents are eligible for membership in the organization.  Additional information is available at https://www.fbitn.com.