AM Best removes mutuals Rural and Badger from review following successful affiliation

By Mia MacGregor

Feb 5 - (The Insurer) - AM Best has removed Rural Mutual Insurance Company ratings from under review with negative implications, and removed Badger Mutual Insurance Company ratings from under review with positive implications following a successfully executed affiliation agreement between the two Wisconsin-based companies that closed on 1 January 2025.

Additionally, AM Best affirmed the A+ (Superior) financial strength rating (FSR) and “aa-” long-term issuer credit rating (ICR) of Rural, and upgraded Badger from C++ (Marginal) to A+ (Superior) for FSR and from “b+” (Marginal) to “aa-” for ICR, with both companies now carrying a negative outlook.

As part of the deal, Rural assumes 100 percent of Badger’s net liability for premiums, losses and expenses, and retains control of its board, according to AM Best.

Both companies will share services such as underwriting, claims management, actuarial analysis, human resources services, marketing, and strategic planning, but will continue operating separately.

AM Best highlighted the benefits of expanded geographic risk distribution for Rural and enhanced scale for Badger.

However, the ratings agency noted that the negative outlook reflects concerns over potential execution risks and Badger’s recent weather-related loss volatility, which could impact group performance.

In October, AM Best announced that it had placed the ratings of Rural and Badger under review after the two entities signed the definitive agreement to affiliate.

According to SNL, Rural wrote $286.1mn in direct premiums in 2023 and Badger $147.2mn.