AM Best Withdraws Credit Ratings of Western General Insurance Company
The ratings reflect Western General’s balance sheet strength, which AM Best categorizes as weak, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).
The rating downgrades reflect a revision in AM Best’s assessment of Western General’s operating performance to marginal from adequate, given the deterioration in underwriting results, which was driven largely by adverse loss reserve development over the past five years.
The negative outlooks reflect pressure on the company’s balance sheet strength given its extremely elevated net and gross underwriting leverage, which has been trending upward over the past five years, and is well above the industry composite average. Additionally, the negative outlooks reflect Western General’s unstable loss reserving trends over the same period, as the company has reported adverse development in each of the past five calendar years.
The company’s balance sheet strength assessment of weak is supported by its strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), along with its conservative investment portfolio, which are offset by Western General’s elevated underwriting leverage measures and adverse loss reserving trends. AM Best views the company’s business profile as limited, based on its geographic and product concentration as a non-standard auto writer predominately in
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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Source: AM Best
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