A.M. Best Co. has affirmed the financial strength rating (FSR) of B- (Fair) and assigned issuer credit ratings (ICR) of “bb-” to Optimum Insurance Company and its subsidiary, Optimum Farm Insurance Inc.

A.M. Best has also upgraded the FSR to B- (Fair) from C++ (Marginal) and assigned an ICR of “bb-” to Optimum West Insurance Company. In addition, A.M. Best has assigned an ICR of “ccc+” to Optimum General Inc.

The outlook for all ratings is stable.

The rating affirmations reflect Optimum Insurance’s elevated underwriting leverage and historically adverse operating performance. These negative rating factors are partially offset by Optimum Insurance’s improved underwriting results in recent years, a conservative investment profile and favorable reserve development. Optimum Farm maintains favorable underwriting leverage measures and positive operating results.

Optimum West, which now carries the group ratings, has been impacted by adverse prior year underwriting results that have strained its profitability. The adverse results were mainly due to reserve strengthening from prior accident years and an unfavorable ruling concerning leaky condominiums in British Columbia. In recent years, management has focused on improving profitability through stricter underwriting guidelines, better risk selection and cancellation of unprofitable brokers. Indications are favorable as Optimum West has reported improvement in underwriting performance, operating earnings and reserve development.

The ratings for Optimum West also consider the strategic role it plays in the Optimum family as well as the financial support and flexibility it is afforded as a member of Optimum General Inc.