AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” (Good) of RAM Mutual Insurance Company (RAM) (Esko, MN). The outlook assigned to the FSR is stable, while the outlook assigned to the Long-Term ICR is negative.

The Credit Ratings (ratings) reflect RAM’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

Removing the ratings from under review with negative implications reflects RAM’s successful implementation of its capital raising program to stabilize policyholder surplus at Dec. 31, 2023, through the issuance of $12.4 million of Guaranty Certificates to several township mutual organizations in Minnesota. Through this action, RAM raised its risk-adjusted capitalization to the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), which supports its very strong balance sheet strength assessment. The company has fully placed its 2024 reinsurance program, which includes additional limit to protect its policyholder surplus from catastrophe events and has initiated several underwriting coverage changes, premium rate increases and agency management actions to limit new business growth, which it projects will improve overall operating performance in 2024.

However, due to its elevated net and gross underwriting leverage metrics, increased reinsurance dependence and net catastrophe retention, there is continuing pressure on RAM’s balance sheet strength as reflected in the negative outlook of the Long-Term ICR. AM Best assesses operating performance as marginal due to the significant volatility experienced over the past three years due to frequent and severe weather-related events. The business profile assessment reflects RAM’s geographic concentration in Minnesota, which creates increased susceptibility to frequent and severe weather-related events. RAM currently has an appropriate ERM assessment.

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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