Oldwick, NJ -(BusinessWire)- A.M. Best Co. has affirmed the financial strength rating of B (Fair) and issuer credit rating of “bb+” of Repwest Insurance Company (Repwest) (Phoenix, AZ). The outlook for both ratings is stable. Repwest is a wholly owned subsidiary of AMERCO (Reno, NV) [NASDAQ:UHAL], a publicly- traded holding company. AMERCO also is the parent of U-Haul International, Inc (U-Haul), North America’s leading “do-it-yourself” moving and storage operator.
The ratings reflect Repwest’s unfavorable underwriting performance in the majority of its last five years, primarily due to adverse loss reserve development associated with its discontinued excess workers’ compensation business as well as the company’s historically high cost structure. Most notably, in 2011, Repwest’s substantial reserve strengthening for its excess workers’ compensation resulted in a reduction in policyholder surplus and a notable deterioration in its results that year.
These rating factors are offset by Repwest’s adequate level of risk-adjusted capitalization and favorable accident year operating performance, following management’s decision to focus strictly on U-Haul-related business. Furthermore, in 2012, net income of close to $17 million was generated, resulting in significantly improved operating return measures for the year. The stable outlook acknowledges A.M. Best’s expectations that Repwest will continue to maintain a supportive level of risk-adjusted capital.
Future negative rating actions could result if there is a deterioration in Repwest’s underwriting performance or a significant decline in its capital strength as measured by Best’s Capital Adequacy Ratio (BCAR).