Press Release - OCTOBER 24, 2013

A.M. Best Upgrades Ratings of Western Mutual Insurance Pool’s Members

Michael T. Venezia
Senior Financial Analyst
(908) 439-2200, ext. 5034

Gary Davis
Assistant Vice President
(908) 439-2200, ext. 5665

Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK, N.J. - OCTOBER 24, 2013
A.M. Best Co. has upgraded the financial strength rating to A+ (Superior) from A (Excellent) and the issuer credit ratings to “aa-” from “a+” of Western Mutual Insurance Pool’s members, Western Mutual Insurance Company, Residence Mutual Insurance Company and Arizona Home Insurance Company (Phoenix, AZ) (collectively referred to as Western Mutual). All companies are domiciled in Irvine, CA, unless otherwise specified. The outlook for all ratings has been revised to stable from positive.

The rating upgrades reflect Western Mutual’s superior risk-adjusted capitalization, historical underwriting profitability and declining underwriting leverage trend in recent years. The ratings also recognize that the group is able to employ multiple distribution channels to market its products. Besides brokers and independent agents, Western Mutual also is able to leverage its strong products and marketing efforts to facilitate steady growth of its direct business of homeowners’ insurance.

These strengths are partially offset by Western Mutual’s concentration of business in California, which exposes earnings and surplus to volatility from changes in that state’s regulatory and judicial climate, competitive and economic conditions as well as catastrophe risks.

Factors that could lead to rating downgrades for Western Mutual or a revision of the outlook to negative include unfavorable operating profitability trends; outsized catastrophe or investment losses relative to expectations and peers; significant adverse loss reserve development; and/or a material decline in risk-adjusted capital.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.

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