June 10, 2025 — AM Best has announced the upgrade of the Financial Strength Rating (FSR) for members of the Midwest Insurance Group (Midwest), increasing it from A- (Excellent) to A (Excellent). Additionally, the Long-Term Issuer Credit Ratings (Long-Term ICR) have been raised from “a-” (Excellent) to “a” (Excellent) for Midwest Insurance Company (based in Springfield, Illinois), West River Insurance Company (headquartered in Sioux Falls, South Dakota), and Brickyard Insurance Company (located in Fort Wayne, Indiana). The outlook associated with these ratings has also been revised, changing from positive to stable.

The upgraded ratings reflect AM Best’s evaluation of Midwest’s overall financial position, which is characterized by a very strong balance sheet, robust operational results, a narrow but stable business profile, and sound enterprise risk management (ERM) practices.

A major contributing factor to the favorable balance sheet assessment is the group’s exceptionally strong level of risk-adjusted capitalization, as determined by Best’s Capital Adequacy Ratio (BCAR). This indicates a solid capital buffer relative to the risks it undertakes. AM Best further noted that Midwest’s capital base is strengthened by consistent operational profitability and a diversified, well-managed investment portfolio. This portfolio generates reliable net investment income, and when combined with historically favorable reserve development trends, ample liquidity, and strong cash flow generation, supports the group’s “very strong” financial foundation.

The group’s operating performance rating has also been enhanced, moving from “adequate” to “strong.” This improvement is supported by continued profitability within the underwriting segment and a growing contribution from investment returns. Midwest’s performance metrics have consistently surpassed those of the broader workers’ compensation insurance sector over both five-year and ten-year periods. This outperformance has played a critical role in the group’s ability to grow its policyholder surplus organically. Notably, the company has achieved superior return-on-equity (ROE) and return-on-revenue (ROR) ratios when compared to its industry peers during the past five years.

While Midwest maintains a narrow business focus as a monoline provider specializing exclusively in workers’ compensation insurance, it does so through partnerships with small to mid-sized independent agencies. This targeted strategy results in moderate concentration risk, as the company operates within a specific line of business and is potentially more vulnerable to evolving market dynamics. These may include competitive challenges in specific geographic markets or shifts in legislation, regulation, or judicial interpretation. Nonetheless, this risk is partially offset by Midwest’s strategic emphasis on responsiveness and service to its local agency partners, ensuring strong relationships and adaptability in the face of external changes.