CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - AUGUST 14, 2003 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) for the members of the Wawanesa Insurance Group (Winnipeg), which is comprised of Wawanesa Mutual Insurance Company (Wawanesa Mutual) (Winnipeg), Wawanesa General Insurance Company (WGIC) and Wawanesa Mutual Insurance Company, United States Branch (WMICUSB) (both located in San Diego). The rating outlook is stable.
This rating is based upon the group's superior level of capitalization, historically strong operating performance, long-standing market position in the Canadian and U.S. property/casualty sector, its experienced management team and sound business plans. Partially offsetting these strengths are the group's declining investment returns and recently poor underwriting performance-particularly on personal automobile lines in both Canada and the United States.
Wawanesa Mutual maintains a very large surplus base, which has historically been supported by strong positive earnings through operating profitability. This has been achieved through above average returns and capital gains in its investment portfolio, reserve redundancies, efficient expense management through the use of technology and responsive customer service and claims handling. Market position has been achieved through successful long-term relationships with brokers, helping the company maintain a strong regional presence and obtain a high customer retention rate.
These strengths are partially offset by the group's concentration in the personal auto market, resulting in an overall underwriting loss each of the last three years. In Canada, the group is being challenged to maintain adequate rates to counter the effects of loss cost inflation in Ontario, Alberta, and the Atlantic region. In the United States, operations are concentrated primarily in California, presenting a complex regulatory and legal environment, as well as exposure to catastrophic loss. These concerns are mitigated by the group's superior level of capitalization and management's proven ability to generate strong results in this type of environment. In addition, the group is protected by a sound catastrophe reinsurance program.
As regards the U.S. operations, WMICUSB ceased writing new business in 1997 and only services a renewal book of California preferred personal auto and property business. All new business is written through WGIC on a direct basis at preferred rates. WMICUSB consistently generates strong operating results and is extremely well capitalized. Conversely, WGIC's underwriting results have not performed well since its inception; however, A.M. Best expects results to improve as rates continue to harden and as the book of business matures.
Additionally, A.M. Best has affirmed the financial strength rating of A (Excellent) of Wawanesa Life Insurance Company (Winnipeg). The rating outlook is stable.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.