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OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Badger Mutual Insurance Company (Badger) (Milwaukee, WI).

The ratings reflect Badger’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The revision of the outlooks to stable from negative is based on the company’s strengthened reserve position and corrective actions to address prior-year reserve issues and unprofitable business.

Badger’s strong balance sheet strength is supported by its strongest level of risk of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its conservative investment portfolio and solid quick and current liquidity ratios. These strengths are partially offset by adverse loss reserve development trends reported over the past 10 years despite being maintained within the actuarial range of estimates. Expectations are for stabilization of these trends, based on recent corrective initiatives, including incurred but not reported (IBNR) reserve strengthening in 2018, lower casualty retentions and the run-off of two unprofitable business segments.

The company’s adequate operating performance reflects moderate volatility in recent years despite the impact of catastrophe losses and prior-year adverse loss reserve development. Badger has reported pretax earnings in each of the past five years, primarily driven by net investment income that has offset underwriting losses in three of the years. Prospective operating results are expected to benefit from stabilized loss reserve trends, underwriting enhancements and strategic rate changes, with further operating efficiencies gained through its recent investment in technology.

The company’s neutral business profile reflects moderate product and geographic diversification, partially offset by its concentration in Midwestern states, which leaves it susceptible to weather-related events. In recent years, Badger has increased its focused on improved pricing sophistication in personal lines and the run-off of unprofitable business in commercial lines. Premium growth has been achieved through rate activity, expansion in Western territories and profitable book rollovers. New commercial product developments, technology enhancements and growth in long-tenured agencies have helped to improve the overall quality of the book of business. While the company’s ERM is considered appropriate with established risk appetite/tolerance statements that are tied to the strategic planning process, actual results have not met projections in recent years.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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Maurice Thomas

Senior Financial Analyst

+1 908 439 2200, ext. 5794

[email protected]

Michelle Baurkot


+1 908 439 2200, ext. 5314

[email protected]

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

[email protected]