A.M. Best Co. has upgraded the financial strength rating (FSR) to “B” (Fair) from “C++” (Marginal) and the issuer credit ratings (ICR) to “bb” from “b” of the Republic Western Insurance Group, which consists of Republic Western Insurance Company of Phoenix, Ariz. and its wholly owned subsidiary, North American Fire & Casualty Insurance Company of Mandeville, La. The outlook for all the ratings is stable.
Best explained the decision to upgrade the ratings as a result of “management’s initiatives to discontinue non-core lines of business.” best recognized that the moves have “improved underwriting and operating performance, which has also stabilized risk-adjusted capitalization.”
The ratings also consider the improved financial condition of its parent, AMERCO.
Even though Republic Western’s “performance and capitalization have improved in recent years,” Best indicated that the ratings continue to reflect the Company’s “fair capitalization and historically poor underwriting and operating performance,” as well as its limited business profile.
The rating outlook is based on Best’s expectation that improved operating results will “continue to offset the historical earnings drag generated from the group’s run-off operations, and thus add to surplus in the medium term.”