OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to “a” from “a-” of Westminster American Insurance Company (Westminster) (Owings Mills, MD). The outlook for each rating has been revised to stable from positive.
The upgrades reflect the company’s consistently solid risk-adjusted capitalization and profitable results, which are attributable to management’s underwriting expertise within its growing commercial lines book of business. The company’s capital position stems from year-over-year improved underwriting income complemented by a steady stream of net investment income, which has led to more than doubling surplus over the past five-year period. Westminster’s combined and operating ratios have outperformed the commercial property composite in each of the past ten years due to management’s strict underwriting practice and efficient claims handling.
Additionally, Westminster has a longstanding market presence with local expertise and strong agency relationships primarily in Maryland and the District of Columbia. Management has worked to enhance the overall profile by growing business in neighboring states while keeping to their niche business.
Partially offsetting these positive rating factors are Westminster’s geographic concentration and slightly elevated expense ratio. Property risks are geographically concentrated in Maryland and the District of Columbia exposing the company’s surplus to weather-related events and competitive market conditions. However, Westminster maintains a comprehensive reinsurance program, which mitigates the impact of catastrophic weather-related loss events, while focusing its efforts on gradual geographic diversification though expanded distribution channels. The company’s expenses are elevated primarily as a result of increased commissions. In earlier years, expenses were also affected by moving Westminster’s headquarters accompanied by updated technology efforts; however, expenses have decreased since settling in the new location.
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