AM Best Affirms Credit Ratings of Berkshire Hathaway GUARD Insurance Companies’ Members

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AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of aa- of WestGUARD Insurance Company, AmGUARD Insurance Company, EastGUARD Insurance Company, NorGUARD Insurance Company and AZGUARD Insurance Company (Omaha, NE), which operate under an intercompany pooling agreement. These companies are members of Berkshire Hathaway GUARD Insurance Companies (GUARD) and domiciled in Wilkes-Barre, PA, unless otherwise specified. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect GUARDs balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

GUARD continues to maintain solid risk-adjusted capitalization, throughout the recent period of significant premium growth. Despite minor deterioration in underwriting ratios, GUARD continues to generate favorable underwriting and operating earnings, as they expand into new business lines and segments. The ratings further recognize the implicit and explicit financial support provided by GUARDs immediate parent, National Indemnity Company (NICO), including significant capital support via reinsurance transactions. NICO is a subsidiary of Berkshire Hathaway Inc. (Berkshire) [NYSE: BRK A and BRK B].

GUARDs favorable performance and risk-adjusted capitalization is offset somewhat by above-average premium growth in all lines of business. While the groups core workers compensation business continues to produce favorable return ratios, the groups new business lines have been less favorable. However, GUARD has been deliberate and measured in its approach to the market, and views these product lines as a long-term plan to improve the scale and diversification of earnings. Despite these concerns, the outlooks reflect GUARDs enhanced financial flexibility provided by Berkshire, solid balance sheet and historical underwriting profitability.

AM Best believes GUARDs operating companies are well-positioned at the current rating levels. However, these ratings could come under negative pressure should softer market conditions occur in their new product lines, and expansion initiatives result in a decline in underwriting and overall profitability to levels underperforming their peers, or if a significant, sudden reduction in surplus results from losses in their investment portfolio, which has a significant allocation to equity holdings.

In addition, the ratings could be under negative pressure should Berkshire cease to provide adequate financial and operational support.

This press release relates to Credit Ratings that have been published on AM Bests website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Dan Hofmeister, CFA, CAIA, CPCU, ARe

Financial Analyst

+1 908 439 2200, ext. 5385

[email protected]

Mariza Costa

Associate Director

+1 908 439 2200, ext. 5154

[email protected]

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

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Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

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