A.M. Best Revises Outlooks to Negative for West Virginia National Auto Insurance Co.

A.M. Besthas revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” of West Virginia National Auto Insurance Co., based in Morgantown, W.Va.

The ratings company said in a press release that the revised outlooks are due to West Virginia National Auto’s deteriorating risk-adjusted capitalization from unprofitable operating performance in recent years. Management fell short of projections mainly due to an unfavorable book of business, which ultimately has been non-renewed.

Additionally, the company maintains geographic concentration exposing surplus to regulatory, judicial and economic concerns, as well as the cyclical nature of competition altering the market share within its domiciled state.

Partially offsetting these negative rating factors are management’s expertise in West Virginia and the non-standard market, and its ability to react quickly to maintain favorable leverage measures, A.M. Best said.

Historically, results of the core book of business in West Virginia have been stable. Policies are shorter term, and rate changes are quickly felt in the results. Management maintains good relationships with its agency force, and current disruptions have allowed for new agency relationships to form. Also, communication with reinsurance partners allow for changes in quota share agreements in the event that leverage measures are outside of the company’s risk tolerance levels.

West Virginia National Auto could not be reached for comment.

Source: A.M. Best

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