AM Best has removed under review with negative implications and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” (Superior) of Rural Mutual Insurance Company (Rural) (Madison WI). Concurrently, AM Best has removed from under review with positive implications and upgraded the FSR to A+ (Superior) from C++ (Marginal) and the Long-Term ICR to “aa-” (Superior) from “b+” (Marginal) of Badger Mutual Insurance Company (Badger) (Milwaukee, WI). The outlook assigned to these Credit Ratings (ratings) is negative. Both companies are collectively referred to as Rural Mutual Insurance Group.

The ratings reflect Rural Mutual Insurance Group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

Rural’s and Badger’s ratings have been removed from under review with various implications following a successfully executed affiliation agreement between the two companies that closed on Jan. 1, 2025. This transaction is secured via a 100% reinsurance quota share agreement, in which Rural is assuming 100% of Badger’s net liability for premiums, losses and expenses, and maintaining control of Badger’s board of directors. There is a management agreement in place as well, which stipulates the sharing of various services among both entities, including but not limited to, underwriting, claims management, actuarial analysis, human resources services, marketing and strategic planning. Still, each company will continue to operate separately, allowing for continuity in operations and brand recognition with long-standing roots in Wisconsin.

For Rural, the affiliation improves its geographic spread of risk by providing access to additional operating territories that Badger is licensed within already and promotes diversification in its distribution channels through the utilization of Badger’s independent agency force. Badger is expected to benefit from accessibility to an organization of a larger scale, which maintains a sound level of underwriting expertise in one of its key states.

The negative outlooks, however, consider the strong operating performance assessment and the execution risk associated with the newly formed group’s ability to perform in alignment with Rural’s historical norms. Badger’s operating results exhibited severe volatility between 2022 and 2023, owed predominately to sizable weather-related losses, and have the potential to pose a drag on the group’s prospective results. While improvement was noted in Badger’s results through 2024 due to more typical weather loss activity, as well as various underwriting and pricing adjustments, should the group’s combined operating results deteriorate such that the strong assessment level no longer applies, the ratings could be downgraded.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250204907465/en/