A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and assigned issuer credit ratings (ICR) of “aa” to Winnipeg-based Wawanesa Mutual Insurance Company and The Wawanesa Mutual Insurance Company (U.S. branch).

Additionally, A.M. Best has affirmed the financial strength rating of A (Excellent) and assigned an issuer credit rating of “a” to wholly owned life/health subsidiary, The Wawanesa Life Insurance Company . The outlook for both ratings is stable.

A.M. Best also has affirmed the financial strength rating of A+ (Superior) and assigned an issuer credit rating of “aa-” to wholly owned subsidiary, Wawanesa General Insurance Company, of San Diego. The outlook for the financial strength rating has been revised to negative from stable, and the outlook assigned to the issuer credit rating is negative.

The ratings agency says the he ratings of Wawanesa Mutual are based on its superior level of capitalization and strong, liquid balance sheet supported by profitable operating performance, geographic diversification and its market position among the Canadian property/casualty insurance industry leaders, as well as its diversified product mix and experienced management team.

A.M. Best says these rating strengths are offset in part by the challenges WMIC faces in the personal lines automobile market due to regulatory reforms, increasing claims frequency, increased competitive pricing pressures mainly on commercial lines business and the weaker capitalization and operating performance of Wawanesa General in the United States.

Wawanesa General’s revised rating outlook is due to a decline in its risk-adjusted capitalization and a continuance of its below average operating performance, which are not consistent with its current ratings. Partially offsetting these rating weaknesses is the explicit financial support of Wawanesa General’s Superior rated parent, Wawanesa Mutual, and Wawanesa General’s competitive marketing strategies as a direct writer in the California personal auto and property markets.

A.M. Best says the ratings of Wawanesa Life recognize its strong risk-adjusted capital position, profitable operations and the support it receives from WMIC through shared management, operating platforms and common customer base. Wawanesa Life continues to compete in markets dominated by considerably larger players, which have significant economies of scale to drive down unit costs.

http://www.newswire.ca/en/releases/archive/October2007/25/c8371.html