AM Best Downgrades Credit Ratings of Westminster American Insurance Company; Maintains Under Review With Negative Implications Status
11 Julio 2024 - 9:59AM
Business Wire
AM Best has downgraded the Financial Strength Rating to
A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit
Rating to “a-” (Excellent) from “a+” (Excellent) of Westminster
American Insurance Company (WAIC) (headquartered in Owings Mills,
MD). Concurrently, AM Best has maintained the under review with
negative implications status for these Credit Ratings
(ratings).
The ratings reflect WAIC’s balance sheet strength, which AM Best
assesses as very strong, as well as its adequate operating
performance, limited business profile and appropriate enterprise
risk management (ERM).
WAIC’s ratings were downgraded primarily as a result of its
removal from the Nodak Insurance Group (Nodak) pool. In 2020, WAIC
was acquired by NI Holdings, Inc. (NODK: Nasdaq) and subsequently
added as a member of the Nodak group via a pooling agreement. The
acquisition gave WAIC access to financial efficiencies provided
through a larger-scaled organization. However, effective June 30,
2024, WAIC was sold by NI Holdings, Inc. back to its original
owners, and has since been removed as a member of Nodak.
Consequently, WAIC’s business profile assessment was lowered to
limited from neutral. The company is concentrated from a product
standpoint predominately writing commercial property risks in
several mid-Atlantic states, which leaves overall results
vulnerable to potentially frequent and severe weather-related
events. Further, given variability in its operating results over
the most recent five-year period, the operating performance
assessment was lowered to adequate from strong. WAIC’s key
operating return metrics (combined/operating ratios, pre-tax and
total returns) over the past five-years largely reflect its portion
of the Nodak pool. Accordingly, its direct pure loss ratios are
more indicative of its performance outside of the pool and have
been climbing over that same period. The balance sheet strength is
still considered to be very strong, given the company’s overall
level of risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR), its conservative investment
philosophy and appropriate reinsurance protection. Lastly, AM Best
considers the company’s ERM to be appropriate with risk management
capabilities commensurate with its risk profile.
The ratings will remain under review with negative implications
until AM Best can assess WAIC’s prospective financial and
operational plans under new ownership. The company is expected to
begin reporting its own results apart from the pool in the third
quarter of 2024. Should WAIC’s future results and/or business plan
on a standalone basis, independent of the pool, not be consistent
with its current rating, the negative implications could result in
additional downgrades.
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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Lauren Magro Financial Analyst +1 908 882
2082 lauren.magro@ambest.com Joseph Burtone
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908 882 2318 al.slavin@ambest.com