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AM Best Downgrades Issuer Credit Rating of Western Mutual Insurance Pool’s Members, Affirms Financial Strength Rating

AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “a+” (Excellent) and affirmed the Financial Strength Rating of A (Excellent) of Western Mutual Insurance Pool’s members: Western Mutual Insurance Company, Residence Mutual Insurance Company and Arizona Home Insurance Company (Scottsdale, AZ) (collectively referred to as Western Mutual). The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Irvine, CA, unless otherwise specified.

The ratings reflect Western Mutual’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The Long-Term ICR downgrade reflects challenges stemming from geographic and product concentrations of Western Mutual’s portfolio, evident by results that have deviated from historic performance over a period of time. The diminished performance was partly influenced by limitations within Western Mutual’s legacy policy administration system while concurrently encountering challenges in getting rate filings approved by the California Department of Insurance. Western Mutual is progressing through an update to its policy administration platform, which is expected to improve rate-matching capabilities, along with deductible adjustments specifically targeting water losses and wind and hail exposures. Mitigating water-related losses is a central focus as Western Mutual continues to tighten underwriting guidelines and refine the risk portfolio. Furthermore, the performance of the pool’s direct book of business has somewhat eroded, which management has responded to by tightening distribution controls and guidelines.

The stable outlooks reflect AM Best’s expectation that Western Mutual will maintain its balance sheet strength assessment at the strongest level, supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), generally reliable surplus growth and comparatively low underwriting leverage. Western Mutual’s operating performance remains in line with adequate expectations producing consistent net income over the past five-year period, albeit with a modest level of volatility. The ERM strategy remains appropriate, centered on identifying and monitoring exposures and assessing appropriate levels of retained risk through cost benefit analyses. Western Mutual further protects its capital position through a comprehensive reinsurance program that effectively limits tail risk.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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