A.M. Best has downgraded the Financial Strength Rating to B- (Fair) from B (Fair) and Long-Term Issuer Credit Rating to “bb-” from “bb” of West Virginia National Auto Insurance Co. (Morgantown, WV). The outlooks of these Credit Ratings are negative. Concurrently, A.M. Best has withdrawn the ratings as the company has requested to no longer participate in the A.M. Best’s interactive rating process, according to a press release from the ratings agency.
A.M. Best said the ratings and outlooks reflect WV National Auto’s balance sheet strength, which A.M. Best categorizes as weak, as well as its marginal operating performance, limited profile and appropriate enterprise risk management. The company is a niche writer of non-standard automobile insurance, which is inherently volatile. Underwriting is limited to West Virginia since the company exited Virginia in 2016. Return measures are generally negative due to underwriting losses mainly driven by business that was written in Virginia.
A.M. Best said there is currently less competition within West Virginia for non-standard business due to the state’s ability to cap fee income, causing other carriers to withdraw from the market. Through 2017, a combination of increased net writings, combined with a drop in the company’s surplus, has resulted in a material decline in the company’s capitalization.
West Virginia National Auto’s CFO David Remmells told Insurance Journal the company chose to withdraw from A.M Best’s rating process because it no longer saw the need or cost benefit in participating given it now just writes one line of business in one state. He added the most recent negative rating by A.M. Best was part of the agency’s final analysis performed when the insurer asked to withdraw.
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