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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 27, 2016 11:16 AM (EDT)
A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Western Financial Insurance Company (WFIC) (Winnipeg, Manitoba, Canada). The outlook for each rating is stable. Western Financial Group, Inc., the parent of WFIC, is ultimately owned by Desjardins Financial Group (Desjardins). Concurrently, A.M. Best has withdrawn the ratings following the company’s request to no longer participate in A.M. Best’s interactive rating process.
The ratings of WFIC reflect the company’s solid risk-adjusted capitalization and consistently sound operating results driven by profitable underwriting results operating within a relatively low-risk business. The ratings also consider the financial flexibility and support provided by its ultimate parent company, Desjardins. These positive rating factors are partially offset by WFIC’s pre-tax return on revenue measures, which have trailed the industry composite over the long term, declining levels of investment income and historically elevated underwriting expense levels. While WFIC maintains a strong presence in the pet insurance market segment, its business profile is somewhat limited, operating as a monoline writer in a niche market where competition is increasing.
The positive rating factors are derived from the company’s focused underwriting discipline, which has consistently produced favorable pure loss ratios. In addition, favorable operating performance has resulted in sound pre-tax operating returns during the latest five-year period. The negative rating factors are reflective of the elevated underwriting expense level, which has dragged the combined ratio results. Although WFIC is a specialty writer and a market leader of pet insurance in Canada, this poses some inherent risk of concentration as a monoline writer. While this is a unique market segment, A.M. Best believes the company is generally well-positioned and remains committed to its established underwriting guidelines despite increasing market competition and new market entrants.
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.
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