Oldwick, NJ -(BusinessWire)- A.M. Best has revised the outlook to stable from negative for the issuer credit rating (ICR) and affirmed the financial strength rating (FSR) of A (Excellent) and ICR of “a+” of Louisiana Workers’ Compensation Corporation (LWCC) (Baton Rouge, LA). The outlook for FSR remains stable.
These rating actions reflect LWCC’s excellent level of risk-adjusted capitalization, historically strong operating performance, which has outperformed the peer composite over the long term, and its dominant position in the Louisiana workers’ compensation market. The ratings also acknowledge the company’s effective loss control services and the successful track record of the executive team in managing LWCC’s operations.
These positive rating factors are somewhat offset by LWCC’s concentration risk. The company operates as a monoline writer in a single state, and its operations are highly exposed to changes in the local regulatory, economic and competitive environment. Additionally, LWCC’s operating performance has moderately deteriorated in recent years due to competitive market conditions and significant policyholder dividends.
The revised ICR outlook reflects the stabilization of the company’s loss and loss adjustment expense ratio and sustained favorable operating results. A.M. Best expects that operating results will remain strong, resulting in continued strong capitalization that is well supportive of LWCC’s ratings.
While the ratings for LWCC are stable, future positive rating actions may result from its continued strong underwriting and operating performance. However, negative rating actions could result if operating performance or risk-adjusted capitalization falls markedly short of A.M. Best’s expectations.