AM Best Revises Issuer Credit Outlook to Positive for Trans World Assurance Company

AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” (Good) of Trans World Assurance Company (TWA) (San Mateo, CA). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect TWA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

The outlook revision to positive reflects TWA’s long-term improvement in ERM, which has come more in line with its peers. The company’s overall ERM program and risk management and controls have become more formalized. Risk identification and reporting are better documented, with risks being scored for likelihood and severity of impact. The company has established several committees as a part of its risk management process, with well-defined roles and responsibilities. Additionally, TWA’s relatively small size and close communications of its senior management team have allowed the company to respond quickly to any issues that may arise.

The balance sheet strength of TWA is assessed as very strong, driven by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital and surplus has increased in recent years due to TWA’s consistent operating income but has been dragged by dividends paid to the holding company. The operating performance of TWA is assessed as adequate, evident by the steady operating earnings that it has experienced. Net premium growth has been flat over the past five years, but management has indicated initiatives the company will take to help grow premium. The business profile of TWA is assessed as limited as the company operates in a niche marketplace, mainly serving the military community.

This press release relates to Credit Ratings that have been published on AM Best’s 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 Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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