OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of Wawanesa General Insurance Company (Wawanesa General) (San Diego, CA). Additionally, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Wawanesa Life Insurance Company (Wawanesa Life). Concurrently, AM Best has downgraded the Long-Term ICR to “a” (Excellent) from “a+” (Excellent) and affirmed the FSR of A (Excellent) of The Wawanesa Mutual Insurance Company (Wawanesa Mutual). 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 assesses as very strong, as well as its adequate 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. The ratings also reflect Wawanesa General’s improved operating performance in recent years as evidenced by underwriting profitability since 2018. The improved performance also has permitted Wawanesa General to grow policyholder surplus organically through earnings without the dependence or support from its parent to infuse additional capital.
The ratings of Wawanesa Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. Wawanesa Life’s strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), supports the company’s business and insurance risks. In addition, the company maintains robust Life Insurance Capital Adequacy Test (LICAT) ratios. Wawanesa Life has reported solid growth in equity over the most recent five-year period, driven by pre-tax operating income reflective of net investment income that has generally offset underwriting losses as they have occurred.
The ratings of Wawanesa Mutual reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. While Wawanesa Mutual maintains the strongest level of risk-adjusted capitalization, as measured by BCAR, the Long-Term ICR downgrade reflects the impact of ongoing adverse reserve development occurring on recent accident years on the balance sheet strength assessment. Management has indicated that these reserve-strengthening actions are intended to restore a level of conservatism to the carried reserve position going forward.
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