A.M. Best Co. has downgraded the financial strength rating (FSR)
to B+ (Good) from B++ (Good) and the issuer credit rating (ICR) to “bbb-”
from “bbb+” of Great
Western Insurance Company (Great Western) (Ogden, UT). The outlook
has been revised to stable from positive.
These rating actions are based on Great Western’s
net loss in 2007 due to impairment of some collateralized debt
obligations (CDOs), further possible negative impact from the remaining
CDOs, which currently have potential unrealized losses that may affect
its overall capitalization and a decline in its capital and surplus to
liability ratio. With continuing concerns over a weakened credit market
and significant deterioration in the subprime mortgage loan market in
the United States, A.M. Best notes that Great Western’s
balance sheet will remain under financial pressure as additional CDOs
may be impaired going forward. As a result, Great Western’s
capital and surplus position could decline further and could lead to
additional pressure on the company’s
risk-adjusted capitalization relative to its insurance and investment
profile.
Partially offsetting these rating factors are the company’s
sustained growth in the pre-need marketplace, consistently positive
statutory operating results and its improving business profile from its
expanded geographical presence. Great Western anticipates continuing its
new business growth from its pre-need insurance business while remaining
profitable on an operating basis.
For Best’s Ratings, an overview of the rating
process and rating methodologies, please visit www.ambest.com/ratings.
Founded in 1899, A.M. Best Company is a global full-service credit
rating organization dedicated to serving the financial and health care
service industries, including insurance companies, banks, hospitals and
health care system providers. For more information, visit www.ambest.com.
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