A.M. Best Revises Outlook to Negative for West Virginia Mutual Insurance Company

OLDWICK, N.J.--()--A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of West Virginia Mutual Insurance Company (WVMIC) (Charleston, WV).

The revision of the outlook to negative reflects the deterioration in the company’s underwriting and operating results since 2013 and the challenges that the company faces to improve results in the near term given ongoing competitive market conditions, changes in market dynamics in health care delivery and continued low interest rates. WVMIC’s operating and underwriting performance suffered in recent years as a result of a prolonged soft market in the medical professional liability (MPL) segment, increased competition and an uptick in severity, mainly attributed to death claims. In addition, reserve redundancies on prior accident years have diminished and investment income growth remains under pressure due to prolonged low interest rates. The decline in earnings is further accentuated by the company’s single state, mono-line concentration of risk in the MPL sector as they relate to price competition, loss cost trends and regulatory challenges.

Positive rating factors include WVMIC’s excellent risk-adjusted capitalization, historically favorable operating performance, strong market position in West Virginia and a knowledgeable management team. Further supporting the positive rating factors is the state's favorable tort reform environment (including caps on non-economic damages) and WVMIC’s strong ties to the health care community.

Although risk-adjusted capitalization is supportive of the ratings, negative rating action could result if the company’s underwriting and operating performance do not show significant sustained improvement or if there is a material weakening of its risk-adjusted capital position. Positive rating action would occur if the company shows sustained underwriting and overall operating performance improvement.

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 see A.M. Best’s Recent Rating Activity web page.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2016 by A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best Company, Inc.
Sharon Pereira Marks, 908-439-2200, ext. 5477
Senior Financial Analyst
sharon.marks@ambest.com
or
Charles M. Huber, 908-439-2200, ext. 5122
Assistant Vice President
charles.huber@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best Company, Inc.
Sharon Pereira Marks, 908-439-2200, ext. 5477
Senior Financial Analyst
sharon.marks@ambest.com
or
Charles M. Huber, 908-439-2200, ext. 5122
Assistant Vice President
charles.huber@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com