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AM Best Downgrades Credit Ratings of Badger Mutual Insurance Company

AM Best has downgraded the Financial Strength Rating to B+ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “a-” (Excellent) of Badger Mutual Insurance Company (Badger) (Milwaukee, WI). The outlook of these Credit Ratings (ratings) is negative.

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

The rating downgrades reflect material erosion in the company’s capital position, elevated leverage metrics and recent adverse loss development, which weakened the overall balance sheet strength assessment to adequate from strong. The company’s surplus has declined over 40% from year-end 2021 through June 30, 2023, which has led to material erosion in its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The capital erosion can be primarily attributed to outsized volatility in underwriting results in recent periods contributing to significantly negative operating earnings, primarily impacted by weather-related losses and inflationary pressures. Management responded with rate increases, deductible changes, as well as strategic non-renewal of business. While these efforts are expected to generate positive results in the medium-term, the initiatives have yet to gain traction. Further, the downgrade reflects headwinds faced by the company’s current ERM structure to mitigate effectively against the current macroeconomic environment and adequately insulate capital.

The negative outlooks reflect volatility in Badger’s operating performance, which pressures the current adequate assessment. Concurrently, continued severity has the potential to strain capital levels and subsequently risk-adjusted capitalization. Furthermore, while over the long-term the company has proven generally effective at managing the property-exposed portfolio, headwinds presented in the market have challenged the position of the Badger’s business profile.

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

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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