A.M. Best Downgrades Issuer Credit Rating and Affirms Financial Strength Rating of West Bend Mutual Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the issuer credit rating (ICR) to “a” from “a+” and affirmed the financial strength rating (FSR) of A (Excellent) of West Bend Mutual Insurance Company(West Bend) (West Bend, WI). The outlook for the ICR has been revised to stable from negative, while the outlook for the FSR is stable.

The affirmation of the FSR reflects West Bend’s strong risk-adjusted capitalization, stable regional market presence and conservative risk management culture. These positive attributes are further supported by West Bend’s solid agency relationships and profitability in growing business segments. It is A.M. Best’s expectation that West Bend will continue to grow surplus as management further implements strategies to improve its underwriting results and operating efficiencies.

The downgrading of the ICR reflects the decline in West Bend’s underwriting and investment results over the last five years, which has contributed to lower return measures and caused the company to trail its commercial casualty peer composite. West Bend’s underwriting results have suffered since 2007 due to increased storm activity (particularly in 2008, 2010 and 2011), losses related to its assumed international business in 2011, soft market conditions and increased losses in its workers’ compensation program. Investment returns over the same period added additional volatility to West Bend’s total return measures. While A.M. Best acknowledges the corrective actions being taken by management, West Bend’s operating performance in recent years has not met A.M. Best’s expectations, and uncertainty remains regarding improvement in underwriting and operating results in the immediate term.

Negative rating actions will occur if there is a continued decline in West Bend’s underwriting results and/or considerable deterioration in its risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio.

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”; “The Treatment of Terrorism Risk in the Rating Evaluation”; 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, 908-439-2200, ext. 5088
Financial Analyst
[email protected]
or
Jennifer Marshall, 908-439-2200, ext. 5327
Managing Senior Financial Analyst
[email protected]
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.