AM Best has placed under review with positive implications the Financial Strength Rating of C++ (Marginal) and the Long-Term Issuer Credit Rating of “b+” (Marginal) of Badger Mutual Insurance Company (Badger) (Milwaukee, WI).

The Credit Ratings (ratings) have been placed under review with positive implications following the announcement that Badger and Rural Mutual Insurance Company (Rural) have entered into an affiliation agreement. The new relationship is expected to improve Badger’s position as Rural has a much larger capital base and provides a level of expertise in a key state that Badger already writes business in. Each company will continue to function separately affording continuity in operations and brand recognition with long standing roots in the community. The affiliation remains subject to regulatory approval, with an anticipated close in January 2025. Notably, the affiliation agreement includes a quota share agreement, wherein Badger will cede premiums and losses to Rural. There is also an accompanying cost sharing agreement, further enhancing efficiencies.

This affiliation comes on the heels of significant volatility in Badger’s operating performance in 2022 and 2023, which contributed to significant erosion in the company’s surplus position, primarily impacted by elevated weather losses. In response, Badger pursued several corrective actions including double-digit rate increases, mandatory wind and hail deductibles and implementing roof actual cash value schedules, as well as curtailing unfavorable risks. Through the first half of 2024, results have improved comparatively since the prior year, as efforts appear to gain traction. The ratings will remain under review with positive implications until the transaction closes, including customary regulatory approvals, and until AM Best completes its evaluation of the new relationship post transaction.

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.

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