OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best confirmed the financial strength rating of A- (Excellent) and the issuer’s credit rating of âa-â of Western Financial Insurance Company (WFIC) (Winnipeg, Manitoba, Canada). The outlook for each rating is stable. Western Financial Group, Inc., the parent company of WFIC, is ultimately owned by Desjardins Financial Group (Desjardins). At the same time, AM Best withdrew the ratings following the company’s request to no longer participate in AM Best’s interactive rating process.
WFIC’s ratings reflect the firm’s strong risk-adjusted capitalization and consistently strong operating results, driven by profitable underwriting results operating in a relatively low risk business. The ratings also take into account the flexibility and financial support provided by its ultimate parent company, Desjardins. These positive rating factors are partially offset by WFIC’s pre-tax performance measures, which have lagged the industry composite over the long term, declining investment income levels and sales charge levels. historically high. 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 stem from the company’s focused underwriting discipline, which has consistently produced favorable pure loss ratios. In addition, favorable operating performance has translated into strong pre-tax operating returns over the last five-year period. The negative rating factors reflect the high level of sales charges, which weighed on the combined ratio results. Although WFIC is a specialist writer and a market leader in pet insurance in Canada, there is an inherent risk of concentration as a monoline writer. Although this is a unique market segment, AM Best believes the company is generally well positioned and remains committed to its established underwriting guidelines despite increasing market competition and new market entrants.
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