OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit ratings of “a-” of Western Life Assurance Company (WLA) (High River, AB, Canada). The outlook for the ratings is stable. Western Financial Group, Inc., the parent of WLA, is ultimately owned by the Desjardins Financial Group (Desjardins).
The ratings of WLA reflect its solid risk-adjusted capitalization, focus on protection products, increased premiums levels in all core lines of business and consistently positive operating returns with double-digit returns on equity. WLA’s risk-adjusted capitalization continues to be enhanced by the high quality of its investment portfolio, which contains no below investment grade bonds, mortgages or real estate holdings, as well its reinsurance treaty with its ultimate parent, Desjardins. Over the past five years, WLA has recorded consistently positive operating results, which have enhanced aggregate capital levels. As a member of Desjardins, A.M. Best expects that WLA will continue to benefit from the ultimate parent’s financial and strategic support.
As a smaller niche player, WLA faces challenges in achieving greater market share as the Canadian marketplace is highly competitive and dominated by large players with significant cost and scale advantages. The group and individual accident and sickness markets continue to be impacted by competition from these larger, nationally recognized companies, as well as increased utilization. Additionally, profitability in the company’s longer tail products has been impacted by the sustained low interest rate environment.
Factors that could lead to positive rating actions for WLA include further profitable organic growth, favorable trends in risk-adjusted capitalization and positive earnings trends. Key factors that could result in negative rating actions for WLA include deterioration in the financial strength of Desjardins, a diminished level of support from the parent, in A.M. Best’s view, or a sustained decline in risk-adjusted capitalization or operating performance that does not meet A.M. Best’s expectations.
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Evaluating Non-Insurance Ultimate Parents
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for U.S. and Canadian Life/Health Insurers
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.
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