Best’s News & Research Service - August 05, 2016 11:55 AM (EDT)
A.M. Best Revises Outlooks to Positive for Wellington Insurance Company
- August 05, 2016 11:55 AM (EDT)
Oldwick //BestWire// - A.M. Best has revised the outlooks to positive from stable and affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-” of Wellington Insurance Company (Wellington) (Fort Worth, TX).
The revised outlooks reflect Wellington’s improved profitability and more consistent operating results in recent years, which outperform the composite average. Over the past five-year period, surplus has grown each year, driven by better-than-average underwriting performance that resulted in the company reporting operating returns notably higher than the composite average, although declining net investment income has tempered total returns. The profitability-focused initiatives implemented include rate increases and the increased use of predictive modeling. Wellington’s business is produced and underwritten by Wellington Risk Insurance Agency, which has common ownership with the company. The partnership has successfully operated in the property market in Texas for many years. These positive rating factors are partially offset by Wellington’s property-focused book of business in Texas, fluctuating reserve adequacy and heavy reinsurance dependence that is in place to help mitigate weather-related losses. However, the reinsurance risk is partially mitigated by the high-quality reinsurers that participate in the program.
Positive rating action could occur if the company produces consistent underwriting and operating profitability, which leads to organic surplus growth and improved risk-adjusted capitalization. Negative rating action could occur if the company incurs material reduction in its risk-adjusted capitalization or a severe deterioration in profitability.
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.
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