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 RESERVED.

A.M. Best Co.
Adrienne Tortoriello
Financial Analyst
908-439-2200, ext. 5088
adrienne.tortoriello@ambest.com
or
Jennifer Marshall
Managing Senior Financial Analyst
908-439-2200, ext. 5327
jennifer.marshall@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
908-439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
908-439-2200, ext. 5644
james.peavy@ambest.com

Source: A.M. Best Co.