OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Wawanesa General Insurance Company (Wawanesa General) (San Diego, CA). AM Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of The Wawanesa Mutual Insurance Company (Wawanesa Mutual). Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of Wawanesa Life Insurance Company and Western Life Assurance Company (Western Life) (collectively referred to as Wawanesa Life). All companies are headquartered in Winnipeg, Manitoba, Canada, unless otherwise specified. The outlook of these Credit Ratings (ratings) is stable.
The ratings of Wawanesa General reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also consider the implicit and explicit support received from its ultimate parent, Wawanesa Mutual, given Wawanesa Mutual’s role as the lead rating unit within the organization. In addition, the ratings consider the benefits Wawanesa General receives from the capital maintenance agreement that is in place to support risk-adjusted capitalization as needed. Wawanesa General provides Wawanesa Mutual with a U.S.-based platform writing private passenger standard auto insurance and personal property. The rating outlooks revision to stable reflects the improvement in operating results driven by profitable underwriting performance.
The ratings of Wawanesa Mutual reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The stable outlooks reflect the adequate operating results driven by investment earnings and organic growth in policyholder surplus.
The ratings of Wawanesa Life reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.
Wawanesa Life is considered strategically important to the Wawanesa Mutual enterprise as it provides opportunities to offer life, annuity, accident and sickness and disability insurance products to the parent company’s property/casualty (P/C) client base and broker channel. As a result, the ratings consider the implicit and explicit support provided by its ultimate parent, Wawanesa Mutual, which includes a capital maintenance agreement that is in place to support its risk-adjusted capitalization. Risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed as strongest, and is supported by organic earnings growth, invested assets of generally good credit quality, low use of reinsurance and no financial leverage. In addition, Wawanesa Life benefits from diversified distribution through its independent broker network and the multiline channels of Western Life.
Partially offsetting rating factors include Wawanesa Life’s relatively modest presence in the life insurance market, which is highly competitive and dominated by three large insurers. The current low interest rate environment that has impacted spreads on its interest sensitive products and several one-time events that have caused earnings volatility over the past few years, although AM Best notes improved earnings in 2018.
The ratings of Western Life reflect its strategic importance to Wawanesa Life, increased integration and shared services, common management and positive premium and earnings contributions to Wawanesa Life.
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