AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Westminster American Insurance Co.
AM Best assigned an outlook of stable to the credit ratings.
AM Best said the ratings reflect the Owings Mills, Maryland-based insurer’s balance sheet strength, which its analysts assess as “very strong.” In addition, they reflect the insurer’s adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
AM Best’s review follows the return about nine months ago of a previous owner of the insurer. On June 30, 2024, Westminster was reacquired by John Scott, Sr., and the Scott family, from NI Holdings, Inc. for $10.5 million. NI Holdings had purchased the business from Scott in 2020 for $40 million.
Scott originally obtained the 155-year-old company (formerly known as Carroll County Mutual) in 2005 out of receivership from the Maryland Insurance Administration after a capital contribution of $5 million.
In addition to $20 million of surplus that transferred with Westminster American from NI Holdings, another $30 million was contributed to the surplus from John Scott, Sr. Following the closing, A.M. Best placed Westminster American’s rating as A- under review, pending a full.
Following the reacquisition by Scott, the insurer started to report results on a standalone basis in the third quarter of 2024. The ratings were expected to remain under review until AM Best fully assessed management’s prospective business plans.
The ratings have now been removed from under review with negative implications following AM Best’s completed analysis and assessment of Westminster’s prospective financial and operational plans under the new ownership. AM Best said the very strong balance sheet strength assessment is supported by risk-adjusted capitalization maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
Surplus growth as of year 2024 was bolstered by a material capital injection from the new ownership to support the current assessment, as well as future growth and expansion initiatives. AM Best said it expects the company’s BCAR to further strengthen in the near term from organic surplus growth that will continue to strengthen its capital position.
According to AM Best, Westminster’s operating performance is expected to remain adequate, consistent with historical norms supplemented by favorable investment income. Prospective results are expected to further benefit from management’s expertise and long-standing ties in the property/casualty insurance industry insuring commercial habitational risks.
The limited business profile reflects Westminster’s geographic and product concentration as a commercial lines property carrier that operates in several coastal Mid-Atlantic states.
AM Best said it views the company’s ERM as appropriate, supported by its developed framework and appropriate risk management capabilities that include a comprehensive reinsurance program tailored to manage catastrophic and systemic risks effectively.
The stable outlooks are based on AM Best’s expectation that Westminster’s “overall balance sheet strength will remain very strong,” marked by stability in the capital position supported by the strongest level of risk-adjusted capitalization, as measured by BCAR. The stable outlooks further reflect AM Best’s expectation that “operating performance will continue to support the adequate assessment level based on management’s disciplined underwriting and pricing strategies to generate organic surplus growth.”
For 2023, the insurer wrote about $75 million in direct premium, about $14 million of which was in Maryland. It reported a net loss of about $3.8 million for that year, according to the Maryland Insurance Administration’s annual report.
In addition to Maryland, Westminster writes in the District of Columbia, Pennsylvania, Virginia, New Jersey, Delaware, North Carolina, South Carolina, West Virginia, Georgia, Kentucky, Tennessee, Nevada, Oregon, Colorado, Washington, North Dakota and Vermont. It specializes in policies for owners of apartments and office buildings.
John Scott, Jr. is continuing to serve as president and chief executive officer of Westminster as he did before and during the period of NI Holdings ownership.
Topics AM Best
Was this article valuable?
Here are more articles you may enjoy.
White House Seeks to Bring Financial Regulators Under Its Sway 
Florida Bill Advances, Would End Board of Engineers, Other Professional Agencies 
Group Sues California Department of Insurance Over FAIR Plan Surcharges 
Questions About How a Deputy’s Stepson Became the Accused Gunman at FSU Shooting 
