AM Best Downgrades Issuer Credit Rating of Western Mutual Insurance Pool’s Members, Affirms Financial Strength Rating
02 Mayo 2024 - 11:48AM
Business Wire
AM Best has downgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to “a” (Excellent) from “a+” (Excellent) and
affirmed the Financial Strength Rating of A (Excellent) of Western
Mutual Insurance Pool’s members: Western Mutual Insurance Company,
Residence Mutual Insurance Company and Arizona Home Insurance
Company (Scottsdale, AZ) (collectively referred to as Western
Mutual). The outlook of these Credit Ratings (ratings) is stable.
All companies are domiciled in Irvine, CA, unless otherwise
specified.
The ratings reflect Western Mutual’s balance sheet strength,
which AM Best assesses as strongest, as well as its adequate
operating performance, neutral business profile and appropriate
enterprise risk management (ERM).
The Long-Term ICR downgrade reflects challenges stemming from
geographic and product concentrations of Western Mutual’s
portfolio, evident by results that have deviated from historic
performance over a period of time. The diminished performance was
partly influenced by limitations within Western Mutual’s legacy
policy administration system while concurrently encountering
challenges in getting rate filings approved by the California
Department of Insurance. Western Mutual is progressing through an
update to its policy administration platform, which is expected to
improve rate-matching capabilities, along with deductible
adjustments specifically targeting water losses and wind and hail
exposures. Mitigating water-related losses is a central focus as
Western Mutual continues to tighten underwriting guidelines and
refine the risk portfolio. Furthermore, the performance of the
pool’s direct book of business has somewhat eroded, which
management has responded to by tightening distribution controls and
guidelines.
The stable outlooks reflect AM Best’s expectation that Western
Mutual will maintain its balance sheet strength assessment at the
strongest level, supported by its strongest level of risk-adjusted
capitalization, as measured by Best’s Capital Adequacy Ratio
(BCAR), generally reliable surplus growth and comparatively low
underwriting leverage. Western Mutual’s operating performance
remains in line with adequate expectations producing consistent net
income over the past five-year period, albeit with a modest level
of volatility. The ERM strategy remains appropriate, centered on
identifying and monitoring exposures and assessing appropriate
levels of retained risk through cost benefit analyses. Western
Mutual further protects its capital position through a
comprehensive reinsurance program that effectively limits tail
risk.
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 www.ambest.com.
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Quentin Harris Senior Financial Analyst +1 908 882 1816
quentin.harris@ambest.com
Christopher Draghi Director +1 908 882 1749
chris.draghi@ambest.com
Christopher Sharkey Associate Director, Public Relations +1
908 882 2310 christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1 908 882
2318 al.slavin@ambest.com