AM Best affirms ratings of Validus subsidiary

AM Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a+” of the pooled members of Western World Insurance.

Western World is a subsidiary of Bermuda-based firm Validus Holdings, which completed its acquisition of Western World on 2 October, 2014.

Validus’ flagship company is Validus Reinsurance, which maintains the FSR of A (Excellent) and an ICR of “a”. The outlook for all ratings is stable. All members of Western World are domiciled in Keene, New Hampshire.

AM Best says the ratings reflect the group’s strong capitalisation, historically conservative loss reserve philosophy, geographic diversification and the benefits derived from its solid business partnerships among select wholesale general agents and brokers. In addition, Western World maintains a strong leadership position in the US excess and surplus lines sector, according to the rating firm.

These strengths are partially offset by the group’s historically elevated underwriting leverage, higher-than-average expense ratio, low new money yields and competitive pressures, which have restricted earnings during the most recent soft market period, says AM Best.

Following its acquisition by Validus, Western World’s management team has largely remained intact, and Western World operates as a separate entity under Validus.

“From a strategic standpoint, Validus has enhanced and expanded its business profile by providing a US specialty commercial insurance distribution platform, and Western World has the ability to expand its current product offerings. It is anticipated that near term results will be skewed as Western World rebalances its underwriting book,” said AM Best.