AM Best has placed under review with negative implications the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of Rural Mutual Insurance Company (Rural) (Madison, WI).

The Credit Ratings (ratings) have been placed under review with negative implications following Rural’s recent announcement that it has signed a definitive agreement to affiliate with Badger Mutual Insurance Company (Badger). The affiliation will be secured formally via an affiliation agreement and a management agreement, as well as a reinsurance quota share agreement, whereby Rural will 100% reinsure Badger and maintain control of Badger’s board of directors. For Rural, its affiliation with Badger is expected to improve its geographic spread of risk by providing access to additional operating territories in which Badger is licensed, as well as promote diversification in its distribution force through the utilization of Badger’s independent agency force. However, Badger’s book of business has exhibited a considerable level of volatility in recent years, and the execution risk in driving improvement relative to Rural’s current operating performance assessment of strong is likely to result in negative pressure on the rating outlook.

At present, the transaction remains subject to customary closing conditions and regulatory approvals and is slated to be executed by Jan. 1, 2025. The ratings will remain under review with negative implications until the agreements are successfully executed and until AM Best can assess the company’s rating fundamentals operationally and financially 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.

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.

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