A.M. Best Downgrades Ratings of Workmen’s Auto Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the financial strength rating to B- (Fair) from B (Fair) and issuer credit rating to “bb-” from “bb” of Workmen’s Auto Insurance Company (WAIC) (Los Angeles, CA). The outlook for both ratings is negative.

The rating actions reflect WAIC’s poor underwriting performance in recent years, which primarily has been the result of the increased frequency and severity of Florida personal injury protection (PIP) and California physical damage claims that have resulted in significant adverse loss reserve development. Consequently, these heightened underwriting losses led to a significant decline in the company’s surplus in 2011, well below projected levels.

These negative rating factors are partially offset by WAIC’s refined underwriting procedures, revised rates, better agency management and improved claims procedures, which are anticipated to improve the company’s results in the future. In addition, the ratings reflect the continued financial support provided by the company’s owners.

Further negative rating actions may occur if WAIC’s poor underwriting performance persists in 2012, causing a further deterioration of its risk-adjusted capitalization.

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: “Understanding BCAR for Property/Casualty Insurers” and “Risk Management and the Rating Process for Insurance Companies.” 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.
Michael T. Venezia, 908-439-2200, ext. 5034
Senior Financial Analyst
michael.venezia@ambest.com
or
Gary Davis, 908-439-2200, ext. 5665
Assistant Vice President
gary.davis@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Co.