A.M. Best Affirms Ratings of Repwest Insurance Company

A.M. Best has affirmed the financial strength rating of B (Fair) and the issuer credit rating of “bb+” of Repwest Insurance Company (Repwest) (Phoenix, AZ). The outlook for both ratings is stable. Repwest is a wholly owned subsidiary of AMERCO (Reno, NV) (NASDAQ:UHAL), a publicly traded holding company. AMERCO also is the parent of U-Haul International, Inc (U-Haul).

The ratings of Repwest reflect the effect of adverse loss reserve development associated with the company’s discontinued excess workers’ compensation business on the company’s calendar-year underwriting results, particularly in 2011. The most recent accident years are showing favorable results, however, the substantial reserve strengthening in 2011 related to the excess workers’ compensation business resulted in a significant reduction in risk-adjusted capitalization and deterioration in results in that year. Further impacting the results is Repwest’s historically high cost structure.

These negative rating factors are partially offset by Repwest’s supportive level of risk-adjusted capitalization and significantly improved financial results in 2012, 2013 and early 2014. In 2012, net income of approximately $17 million was generated, and in 2013 $18 million, resulting in greatly improved operating return measures for both years. The stable outlook acknowledges A.M. Best’s expectation that Repwest will continue to maintain its supportive level of risk-adjusted capital.

Future positive rating movement could result from a continued demonstration of favorable underwriting results and stabilization of reserves related to the excess workers’ compensation book. Negative rating actions could result if there is deterioration in Repwest’s underwriting performance or a significant decline in its capital strength as measured by Best’s Capital Adequacy Ratio (BCAR).

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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