Press Release - OCTOBER 06, 2017

A.M. Best Revises Outlooks to Positive for Insurance Company of the West and Its Subsidiaries

 Samiksha Gupta
Financial Analyst
+1 908 439 2200, ext. 5658

Robert Raber
Senior Financial Analyst
+1 908 439 2200, ext. 5696

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Insurance Company of the West and its wholly owned subsidiaries, Explorer Insurance Company and VerTerra Insurance Company (collectively referred to as ICW). All companies are headquartered in San Diego, CA.

The positive outlooks are based on ICW’s improved operating and underwriting results over several years, driven primarily by favorable loss experience in its leading line of business, workers’ compensation (WC). As a result, ICW’s five-year average combined and operating ratios outperformed those of the WC composite. Additionally, ICW’s technology platform has resulted in operating and underwriting efficiencies, enabling ICW to optimize risk selection and pricing. Furthermore, ICW’s surplus has grown considerably due to its better-than-average underwriting performance coupled with an increasing level of net investment income.

The Credit Rating (rating) affirmations reflect the group’s solid risk-adjusted capitalization, attributable to the equity embedded in its loss and unearned premium reserve, a comprehensive reinsurance program and a fairly conservative investment portfolio. Furthermore, the ratings reflect the financial flexibility of its parent company, American Assets, Inc.

Offsetting these positive rating factors is ICW’s concentration of risk in California, subjecting the group to the regulatory, judicial and economic environment of the state. Additionally, in 2011, underwriting results declined from ICW’s historical levels, driven by losses from non-standard private passenger auto operations, competitive market conditions and catastrophe losses on assumed reinsurance business. To address these concerns, an effort has been made to reduce non-standard auto business, continue to selectively underwrite special property business and maintain a comprehensive reinsurance program consisting of multi-year treaties.

This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.

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