|[November 19, 2012]
A.M. Best Revises Outlook to Negative for Members of Western Reserve Pool
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has revised the outlook to negative from stable and
affirmed the financial strength rating of A (Excellent) and issuer
credit rating of "a" for the members of Western Reserve Pool,
which consists of Lightening Rod Mutual Insurance Company, The
Western Reserve Mutual Casualty Insurance Company and Sonnenberg
Mutual Insurance Company. All companies are domiciled in Wooster,
The negative outlook reflects the pool's trend of below average
underwriting results driven by greater than expected weather-related
events over several years and elevated operating expenses. The outlook
considers the current challenges faced by management and the potential
impact that ongoing weather- related losses will have on future
underwriting results given the increased number of significant events
observed in 2012 that will continue to impact underwriting profitability.
The ratings acknowledge Western Reserve's solid risk-adjusted
capitalization and established market presence in Ohio and Indiana. he
pool's capital position is attributed to its below average underwriting
leverage and consistent generation of capital from its investment
Western Reserve's operating performance has been impacted by significant
losses stemming mainly from wind and hail storm events. Improving
underwriting profitability remains a key objective of management and is
being addressed through pricing refinements and segmentation, system
enhancements and expense reduction initiatives.
Factors that could trigger further negative rating actions include
weather-related events that cause significant underwriting losses or
below average operating income that causes a significant decline in
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. Key criteria utilized include: "Risk
Management and the Rating Process for Insurance Companies"; "Catastrophe
Analysis in A.M. Best Ratings"; "Rating Members of Insurance Groups";
and "Understanding BCAR for Property/Casualty Insurers." Best's Credit
Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS
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