AM Best Revises Outlooks to Negative for Berkshire Hathaway GUARD Insurance Companies’ Members

AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of “aa-” (Superior) 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 Omaha, NE.

The Credit Ratings (ratings) reflect GUARD’s balance sheet strength, which AM Best assesses at the strongest level, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. GUARD’s ratings further recognize the implicit and explicit financial support provided by GUARD’s immediate parent, National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc. [NYSE: BRK.A and BRK.B], including significant capital support via reinsurance transactions and capital contributions. The negative outlook reflects sharp deterioration in GUARD’s underwriting results that began in the 2023 calendar year and worsened in the first nine months of 2024. The decline in underwriting performance was driven by business lines other than the group’s workers’ compensation business, which continues to perform solidly. GUARD’s significant underwriting losses in 2023 and 2024 included the impact of material reserve strengthening across several business lines, other than workers’ compensation. The group has taken several significant steps to improve its underwriting performance, including discontinuing its underperforming admitted personal lines business and re-underwriting its commercial auto and business owners policy (BOP) programs. GUARD has also made significant additional investments in systems, internal controls and personnel. AM Best notes that over the past 18 months, GUARD has established an almost entirely new senior leadership team that is tasked with restoring its operating performance to the previously adequate levels.

As noted above, potential concerns about GUARD’s overall credit profile are greatly mitigated by the group’s position as a subsidiary of Berkshire Hathaway Inc. The net impact of GUARD’s adverse prior year loss reserve development, while still meaningful, was greatly attenuated by GUARD’s internal reinsurance contracts with NICO. GUARD’s capitalization, which has remained consistently supportive of its overall strongest balance sheet strength assessment, benefited from a significant capital infusion from NICO in the second quarter of 2024. AM Best views these examples of explicit support as indications of Berkshire Hathaway Inc.’s continuing commitment to GUARD.

Going forward, AM Best will continue to closely monitor GUARD’s progress toward restoring performance metrics to levels that are supportive of its current ratings.

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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