Press Release|Insurance
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KBRA Affirms Ratings for Brotherhood Mutual and Revises Outlooks to Stable

30 Jul 2026   |   New York

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KBRA affirms the A- insurance financial strength rating (IFSR) for Brotherhood Mutual Insurance Company (BMIC) and the BBB long term credit rating (LTCR) for the Surplus Notes. The outlook for all ratings have been revised to Stable from Negative.

The rating reflects BMIC’s focused market strategy, geographic diversification with limited exposure concentrations, high customer retention rates, a sound ERM framework and recent improvement in operating results and organic surplus growth. Since 2023, BMIC has generated improved underwriting results, driven by exposure management and implementation of various underwriting initiatives. When combining the improved underwriting results with consistent investment income, BMIC has generated material surplus growth and improved leverage metrics. Surplus notes accounted for approximately 21% of year-end 2025 surplus but was improved from year-end 2023’s 31%. In recent years, underwriting leverage has been driven by premium increases related to rising TIV and rate increases, while policy count remains flat. KBRA believes BMIC has fundamentally sound underwriting and financial analytics with advanced technology for risk selection that the organization continues to evolve, supported by a management team with extensive industry and company experience.

Balancing these strengths is BMIC’s property focused business that necessitates a significant use of reinsurance. KBRA notes that while BMIC no longer purchases an aggregate catastrophe treaty, management believes that its concentration management, quota share reinsurance, and parametric severe convective storm (SCS) and winter storm covers help mitigate its exposure to more frequent and less severe weather events. Nonetheless, KBRA views negatively the company’s elevated retention in its property catastrophe reinsurance cover compared to pre-2023 levels. KBRA recognizes BMIC’s continued enhanced reserving practices to strengthen case and defense and cost containment reserves. However, prior year adverse development has been recorded in four of the last five years, including $87.0 of adverse development in 2025. BMIC continues to maintain above average investment risk, as characterized by a high level of equities to surplus, although the increase in unaffiliated common stock leverage in 2025 was driven by market appreciation rather than new allocations.

Factors that could positively impact the rating include sustained growth in earnings, a sustained favorable trend in risk adjusted capital and balance sheet leverage, improved financial flexibility and liquidity, and a material reduction in investment risk and portfolio equity leverage. Factors that could negatively impact the rating include declining risk adjusted capitalization and material deterioration in balance sheet leverage unrelated to rate increases, unfavorable earnings trends, inability to obtain sufficiently robust reinsurance protection on an economic basis, a sustained trend of material adverse reserve development, and loss of key members of the management team without suitable replacements.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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