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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 30, 2009 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating to B++ (Good) from A- (Excellent) and issuer credit rating to "bbb" from "a-" of Wayne Mutual Insurance Company (Wayne) (Wooster, OH). The outlook for these ratings is stable.
These rating actions follow Wayne's continued decline in risk-adjusted capitalization due to a recent affiliation with Washington Mutual Insurance Association (Washington), combined with deteriorating underwriting results, primarily driven by weather-related events. The affiliation has resulted in an increased risk profile and elevated leverage measures for Wayne, as it is assuming 100% of Washington's business, via a quota share agreement. It is anticipated that this will result in Wayne's net written premium increasing by as much as 40% in the near term.
In addition, the operating results of the assumed business from Washington also have been negatively impacted by weather-related events in recent years. While Wayne has implemented various initiatives to streamline underwriting and claims processes, as well as re-underwriting the Washington book to meet its own criteria, certain execution risk exists regarding the integration of this property business.
Partially offsetting these negative rating factors are Wayne's well established expertise and market presence in Ohio with its long-term agency relationships. In addition, the company has consistently reported favorable loss reserve development, both on an accident and calendar
year basis.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.