OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has removed from under review with negative
implications and affirmed the financial strength rating of B (Fair) and
issuer credit rating of “bb+” of Repwest Insurance Company(Repwest)
(Phoenix, AZ). The outlook assigned to both ratings is stable. Repwest
is a wholly owned subsidiary of AMERCO[NASDAQ: UHAL], a
publicly-traded holding company. AMERCO also is the parent of U-Haul
International, Inc. (U-Haul), North America’s leading “do-it-yourself”
moving and storage operator.
The ratings of Repwest were downgraded and placed under review with
negative implications on February 14, 2012, following disclosure of a
substantial reserve strengthening that occurred in the fourth quarter of
2011 primarily driven by excess workers’ compensation business (which
was discontinued in 2003). The reserve actions resulted in a notable
deterioration in Repwest’s operating results and a significant reduction
in its policyholder surplus at December 31, 2011. Subsequent discussions
between A.M. Best and Repwest’s management team clarified both the
change in reserving methodology that resulted in the reserve actions and
the company’s ongoing claims practices, which in turn resulted in the
assignment of a stable outlook to the ratings.
Repwest’s ratings reflect the decline in risk-adjusted capitalization
due to the 2011 reserve actions, its poor calendar year underwriting
performance in recent years, driven by the significant adverse loss
reserve development associated with its excess workers’ compensation
business (which was discontinued in 2003), and its high cost structure.
These factors are somewhat offset by Repwest’s absolute level of
risk-adjusted capitalization, which, while declining, is currently
sufficient to support the company’s liabilities, and generally favorable
accident year operating performance from 2007 through 2011, following
management’s decision to focus on U-Haul-related business. The stable
outlook acknowledges A.M. Best’s expectations that Repwest will continue
to maintain its supportive level of capitalization prospectively.
Positive rating actions are not expected in the near term. Factors that
could lead to negative rating actions include a continued deterioration
in Repwest’s underwriting performance or a significant erosion of its
risk-adjusted capital level.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: “Risk
Management and the Rating Process for Insurance Companies”;
“Understanding BCAR for Property/Casualty Insurers”; “Insurance Holding
Company and Debt Ratings”; “Evaluating Non-Insurance Ultimate Parents”;
and “Catastrophe Analysis in A.M. Best Ratings.” Best’s Credit Rating
Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.Adrienne TortorielloFinancial
Analyst908-439-2200, ext. firstname.lastname@example.orgJennifer
MarshallManaging Senior Financial Analyst908-439-2200,
MorrowSenior Manager, Public Relations908-439-2200,
PeavyAssistant Vice President, Public Relations908-439-2200,
Source: A.M. Best Co.