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Oldwick, NJ (Profitable.com) A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and issuer credit ratings of “a-” to Economical Mutual Insurance Company (EMIC) and its wholly owned subsidiary, Waterloo Insurance Company (WIC). Both companies are domiciled in Waterloo, Ontario, Canada. The outlook assigned to all ratings is stable.
The rating assignment reflects EMIC’s focused marketing and branding strategies, disciplined underwriting philosophy and pricing segmentation, and have engendered EMIC’s solid risk-adjusted capitalization, historically positive operating performance, diversified product offerings and established Canadian market presence nationally, particularly in Ontario, British Columbia and Alberta.
Partially offsetting the positive rating factors are the group’s somewhat elevated expense ratios, susceptibility to weather-related losses in its geographic footprint, recently fluctuating underwriting performance, and competitive market conditions throughout its underwriting territories, combined with lower investment yields, which is a product of current financial market conditions.
The ratings for EMIC have been extended to WIC. WIC provides the lead company the ability to write personal lines insurance products to affinity groups. The company is material to the business profile of EMIC, critical to its ongoing success and fully integrated into its operations and strategic plans. WIC offers products under the “Economical Select” brand—a variant of EMIC’s name—and is easily identified. WIC benefits from the synergies it derives from participation in the intercompany reinsurance program and an investment-sharing program (with EMIC and its sister companies), as well as explicit and implicit support and direction provided by EMIC’s centralized management structure.
A.M. Best does not expect to lower (or place a negative outlook on) the ratings of EMIC or its subsidiaries in the near to mid-term. Such actions would ensue if the group were to incur material losses in its capitalization; have a severe reduction in the profitability of its core book of business; be unable to contain the elevated expense ratio with the current set of preventative measures that have been recently put in place; suffer severe catastrophic losses that are beyond expectations; or have substantial adverse reserve development.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.