OLDWICK: AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Care West Insurance Company.
The outlook assigned to these Credit Ratings is stable. The ratings reflect Care West’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
Care West’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is categorized as strongest, and AM Best expects it to remain at a similar level in future years. The balance sheet strength assessment also considers the company’s high quality reinsurance panel, conservative investment portfolio and historically redundant reserves.
Care West has generated an adequate level of operating performance with five-year operating metrics outperforming the workers’ compensation (WC) composite.
The company’s recent five-year results have improved significantly compared with its performance during the previous five-year period (2010 to 2014), with certain ten-year metrics moderately underperforming the composite. The improvement in operating performance demonstrates the effectiveness of corrective actions that senior management undertook beginning in 2009.
Care West has limited business diversification as a mono-line WC insurer with geographic concentration. The company is licensed in California and Nevada; however, California accounts for over 99% of its total premiums. This leaves Care West susceptible to potential judicial, legislative or regulatory changes in the WC market within California. Risk-management capabilities are considered appropriate for the company’s risk profile.
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