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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 20, 2016 11:08 AM (EDT)
A.M. Best has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of “a+” of Western National Mutual Insurance Company (Edina, MN) and its wholly owned subsidiaries: Western National Assurance Company (Minneapolis, MN), Western Home Insurance Company (Edina, MN), Pioneer Specialty Insurance Company (Edina, MN), Umialik Insurance Company (Anchorage, AK) and Arizona Automobile Insurance Company (Phoenix, AZ). Collectively, these companies operate under a pooling agreement and are referred to as Western National Insurance Pool (Western National).
Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of Western National’s other subsidiary, American Freedom Insurance Company (American Freedom) (Arlington Heights, IL). Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of “a-” of Western National’s affiliate, Michigan Millers Mutual Insurance Company (Michigan Millers) (Lansing, MI). The outlook for each of these ratings is stable.
The ratings and outlook for Western National reflect its strong risk-adjusted capitalization, solid operating performance in recent years and superior business profile, as the group writes a wide variety of personal and commercial line products in 20 states. These positive rating factors are partially offset by Western National’s exposure to frequent and severe weather events. The ratings and outlook also recognize Western National’s performance in comparison to its peer group, as well as A.M. Best’s expectation that trends in operating performance and risk-adjusted capitalization will continue in the near and longer term.
Regarding future rating movement for Western National, a continuing profitable trend in underwriting performance and continued strong risk-adjusted capitalization would lead to consideration of further positive rating movement. Conversely, any deterioration in operating performance leading to a decline in risk-adjusted capitalization could lead to reassessment of the positive outlook.
The ratings for American Freedom recognize its adequate risk-adjusted capitalization, conservative underwriting leverage and favorable loss reserve development in the highly competitive non-standard automobile market. The ratings also reflect the implicit and explicit support provided by Western National since its purchase of American Freedom in April 2012.
These strengths are partially offset by American Freedom’s limited business profile, with its singular product offering and relatively tight geographic concentration.
A continuation of profitable trends in operating performance for longer terms could lead to positive rating movement. Conversely, any deterioration in underwriting results leading to negative trends, or any material decline in support provided by parent Western National could lead to negative rating pressure.
The ratings for Michigan Millers recognize its adequate risk-adjusted capitalization and improving operating performance following its affiliation with Western National in 2015. The ratings also reflect the implicit and explicit support provided by Western National since the affiliation.
These strengths are partially offset by Michigan Millers’ limited business profile, with its limited product
offering and relatively tight geographic areas of concentration.
Any material deviation from financial projections, adverse loss development that erodes risk-adjusted capitalization, or decline in support provided by affiliate Western National could lead to negative rating pressure.
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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.