OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of A (Excellent) and the issuer credit ratings of “a” of the members of the Western Reserve Pool: Lightning Rod Mutual Insurance Company, Sonnenberg Mutual Insurance Company and Western Reserve Mutual Casualty Company. All companies are domiciled in Wooster, OH.
The rating actions reflect Western Reserve Pool’s strong risk-adjusted capitalization, well-established regional market presence and significant risk management actions taken over several years to improve underwriting profitability. On-going risk management initiatives have included predictive modeling of its leading lines of business, rate-level actions and coverage modifications, as well as expense reduction strategies. Management’s conservative operating philosophy is evident in its underwriting discipline and favorable reserve development trends over the past several years. These strengths are also supported by the pool’s longstanding agency relationships. Despite unprecedented weather-related losses in past years, Western Reserve Pool has remained well capitalized due to its overall conservative operating strategy and adherence to disciplined underwriting principles.
Partially offsetting these positive rating factors is the pool’s geographic risk concentration and the potential impact that above-average weather-related losses would have on underwriting results. Currently, approximately 71% of the Pool’s premiums are derived from Ohio, which causes the results to be exposed to localized storms and judicial and regulatory market pressures. In the past, underwriting performance has been tempered by an elevated expense ratio.
Factors that could trigger positive rating action include long-term trends of positive underwriting and operating results while continuing to grow policyholders’ surplus and risk-adjusted capitalization. Negative rating action could occur if operating performance were to fall materially short of expectations or if there is a considerable deterioration in capital strength, as measured by Best’s Capital Adequacy Ratio.
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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