OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has downgraded the financial strength rating (FSR) to A (Excellent ) from A+ (Superior) and issuer credit rating (ICR) to “a+” from “aa-” of West Bend Mutual Insurance Company (West Bend) (West Bend, WI). The outlook has been revised to stable from negative.
In addition, A.M. Best has affirmed the FSR of A (Excellent) and ICR of “a” of West Bend’s majority owned subsidiary, Michigan Insurance Company (MIC) (Grand Rapids, MI). The outlook for these ratings is stable.
The rating actions reflect West Bend’s subpar, albeit generally positive, operating performance in recent years that continues to trail its commercial casualty peer composite. While West Bend’s results significantly improved in 2009, overall profitability still trails the norm generally seen by companies in the Superior rating categories. Furthermore, West Bend’s business profile as a Midwest writer subjects the company to regional storm losses. While earnings have principally remained profitable, they have been significantly and negatively impacted by soft market conditions in recent years.
Offsetting these negative factors is West Bend’s strong level of capitalization, its stable regional market presence and the company’s plans to achieve a consistent level of operating earnings. The outlook considers the group’s strong capitalization and expectation for improved earnings in the medium term.
The affirmation of MIC’s ratings recognizes its solid capitalization, historically favorable operating results and the operational and financial support the company receives from West Bend. More explicitly, West Bend’s support is particularly evident by its assumption of 75% of MIC’s business through a quota share reinsurance treaty.
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The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.