Oldwick, NJ -(BusinessWire)- A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings of “aa-” of WestGUARD Insurance Company, AmGUARD Insurance Company, EastGUARD Insurance Company and NorGUARD Insurance Company, which operate under an intercompany pooling agreement. These companies are members of Berkshire Hathaway GUARD Insurance Companies (GUARD) and domiciled in Wilkes-Barre, PA. The outlook for all ratings is stable.
The ratings reflect GUARD’s solid capitalization, favorable operating profitability achieved through disciplined underwriting initiatives and conservative reserving philosophy, which has resulted in favorable reserve development in recent years. The ratings also acknowledge the implicit and explicit financial support provided by GUARD’s ultimate parent, Berkshire Hathaway Inc. (Berkshire) [NYSE: BRK A and BRK B], and Berkshire subsidiary, National Indemnity Company, including significant reinsurance transactions.
Partially offsetting these positive rating factors are the group’s above-average growth in its core workers’ compensation line and other commercial classes over the past several years. There is greater inherent risk associated with integrating new product lines and expansion into new states, along with a degree of concentration in several states and production sources. Also, the group’s net investment ratio is below the workers’ compensation composite and comparably rated peers. Despite these concerns, the outlooks reflect GUARD’s enhanced financial flexibility provided by Berkshire, solid balance sheet and historical underwriting profitability.
A.M. Best believes GUARD’s members are well-positioned at the current rating level. However, these ratings or outlooks could come under pressure should softer market conditions and a lack of underwriting discipline in their new product lines and expansion initiatives result in a decline in underwriting and overall profitability to levels underperforming their peers, or should Berkshire fail to provide adequate financial and operational support.