AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to RAM Mutual Insurance Company (RAM) (Esko, MN). The outlook assigned to these Credit Ratings (ratings) is stable.

The 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.

RAM’s business profile reflects limited geographic diversification, with the majority of operations in Minnesota and the remainder in North Dakota. This geographic concentration increases exposure to frequent and severe weather events; however, the presence in North Dakota, which experiences different weather patterns, provides some mitigation. The company is diversified across lines of business, offering both direct and assumed coverage through personal, commercial, and packaged policies. Additionally, RAM serves as a reinsurer for the Chapter 67A Township Mutual Companies in Minnesota. By charter, these township mutuals are licensed to write fire and specified related perils only in towns with populations under 20,000, unless otherwise authorized by the Minnesota Department of Commerce and supported by adequate surplus. The 67A township mutual system comprises approximately 62 companies, with RAM currently holding an 82% market share, covering 51 of these companies.

RAM’s balance sheet strength is supported by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and reinforced by additional qualitative and quantitative factors, including adequate net underwriting leverage, favorable financial flexibility and a conservative investment strategy. The balance sheet also has benefited from a successful capital-raising program, which stabilized policyholder surplus following a significant decline in 2022, which saw the largest single loss in company history. As of December 2023, RAM issued $12.4 million in Guaranty Certificates to several Minnesota township mutuals, with an additional $2.6 million raised by April 2025. Limiting factors include inconsistent reserve development in recent years. Historically, reserve development has been favorable; however, inflation, elevated losses in 2022 and 2023, and late-reported claims have put pressure on the company’s reserves. Additionally, RAM maintains moderate retention levels, resulting in heavy reliance on reinsurance, meaning the company strategically leverages reinsurance to manage volatility, benefiting from its diversified panel of highly rated reinsurance partners.

RAM’s results have fluctuated over the past five years due to increased frequency and severity of losses, including the company’s largest loss in 2022. The impact of 2022 losses carried over into 2023, compounded by late-reported claims from that year. While 2022 and 2023 were volatile, 2024 saw a return to profitability, including underwriting gains that had not been achieved in the prior five years. Management has implemented several initiatives to restore profitability, including rate increases, higher deductibles, agency management actions, and other underwriting measures. While growth has been intentionally limited through selective moratoriums in Minnesota and North Dakota, this strategy demonstrates management’s focus on building consistent, long-term profitability and strengthening the company’s overall foundation.

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