AM Best Comments on Credit Ratings of The Wawanesa Mutual Insurance Company Following Announced Acquisition of Everest Insurance Company of Canada Mar 24, 2026 5:11 PM Eastern Daylight Time AM Best Comments on Credit Ratings of The Wawanesa Mutual Insurance Company Following Announced Acquisition of Everest Insurance Company of Canada Share OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has commented that the Credit Ratings (ratings) of The Wawanesa Mutual Insurance Company (Wawanesa Mutual) (Winnipeg, Manitoba, C ...

Core Viewpoint - The Delaware Supreme Court has allowed cyber insurers to pursue recovery of claims payments made to their insureds who took independent action following a ransomware attack on Blackbaud Inc., which allegedly failed to respond adequately to the incident [1][7]. Group 1: Incident Overview - In July 2020, a cyber attacker accessed Blackbaud Inc.'s systems for several months, exfiltrating confidential customer data and demanding a ransom [2]. - Following the attack, Blackbaud's customers felt compelled to conduct their own investigations and remediation efforts due to dissatisfaction with Blackbaud's response [4]. Group 2: Insurance Claims and Legal Proceedings - Four insurers provided coverage to 97 of Blackbaud's clients, with Philadelphia Indemnity paying over $600,000 and Travelers Casualty and Surety paying more than $1.5 million in claims [5]. - The insurers initially faced a setback when a Superior Court dismissed their complaints, citing a lack of factual support for the claims [6]. Group 3: Supreme Court Ruling - The Delaware Supreme Court reversed the lower court's decision, stating that the insurers met the pleading requirements under both New York contract law and Delaware's standards [7][8]. - The Supreme Court noted that the insurers adequately identified Blackbaud's contractual duties and alleged breaches, including ignoring cybersecurity warnings [10]. Group 4: Damages and Legal Implications - The insurers claimed damages related to costs incurred for investigations, legal counsel, and credit monitoring, which were necessary due to Blackbaud's alleged negligence [11]. - The Supreme Court emphasized that a reasonable factfinder could determine that Blackbaud's breaches were a substantial factor in causing the insureds' expenses [14]. Group 5: Blackbaud's Response and Consequences - Blackbaud initially downplayed the severity of the breach, later revealing that sensitive information may have been accessed [15]. - In 2023, Blackbaud agreed to pay a $3 million fine to the SEC for misleading disclosures and $49 million to resolve claims from all 50 states [15].

Core Insights - Nearly 82% of executives plan to increase their cybersecurity budgets in the next 12 months, while 75.2% anticipate reducing cybersecurity headcount due to AI tools enhancing productivity [1][2] Group 1: AI and Cybersecurity Perception - A survey of 500 CEOs and CISOs in the U.S. and UK reveals significant differences in perceptions of AI's risks and rewards [2] - AI is recognized as a transformative force for data analytics and operational efficiency, but it also introduces a new risk landscape [3] - AI-driven attacks are identified as the top emerging cyber threat (25.2%), surpassing identity theft (18.0%) and supply-chain compromise (16.6%) [4] Group 2: AI-Related Risks - CEOs rank data leakage (28.7%) as their greatest AI-related threat, while CISOs highlight Shadow AI (27.2%) as their primary concern [4] - Other notable AI-related risks include model manipulation (19.0%), deepfake/social engineering (17.6%), and regulatory noncompliance (17.4%) [6] Group 3: Regional Differences in AI Adoption - UK executives exhibit more caution regarding AI adoption compared to their U.S. counterparts, with only 55.3% of UK CEOs confident in AI strengthening cyber defenses versus 88.4% of U.S. CEOs [7] - U.S. leaders (82.8%) are more likely to trust AI tools for cybersecurity decisions than UK leaders (43.3%) [7] - A higher percentage of U.S. respondents (94%) carry cyber insurance compared to 68.4% in the UK [7]

Core Insights - AXIS Capital's research highlights the transformative impact of artificial intelligence (AI) on the risk landscape, revealing differing perspectives between CEOs and CISOs regarding AI's risks and rewards [1][2] Group 1: AI's Impact on Cybersecurity - AI is recognized as a transformative force for data analytics and operational efficiency, but it also introduces new risks, including advanced cyber threats such as shadow AI and ransomware attacks [2] - The survey indicates that 93.5% of U.S. CEOs and 87.5% of U.S. CISOs believe AI delivers a return on investment (ROI) for cybersecurity, compared to 69.1% of U.K. CEOs and 74% of U.K. CISOs [4] - AI-driven attacks are perceived as the greatest emerging cyber threat, with 29.6% of U.S. executives and 20.8% of U.K. executives identifying them as a major concern [6] Group 2: Divergent Perspectives Between CEOs and CISOs - CEOs view AI as a driver of productivity and competitive advantage, while CISOs see it as a source of increased exposure, with 29.7% of CISOs less optimistic about AI strengthening cyber defenses compared to CEOs [5] - Confidence levels differ significantly, with 85% of U.S. leaders feeling prepared for AI threats, while only 44% of U.K. leaders share this confidence [6] - CEOs are more likely to believe their companies are prepared to respond to AI threats, with 60.2% expressing this view compared to 50.6% of CISOs [7] Group 3: Budget and Resource Allocation - Nearly 82% of respondents plan to increase their cybersecurity budgets in the next 12 months, while 75.2% are likely to reduce cybersecurity headcount due to productivity gains from AI tools [6] - A significant gap exists in the adoption of cyber insurance, with 94% of U.S. respondents carrying it compared to 68.4% of U.K. respondents [4] Group 4: Methodology and Demographics - The findings are based on a survey of 500 CEOs and CISOs from the U.S. and U.K., conducted from October 22–29, 2025, with respondents representing companies of at least 250 employees [9]

Industry Overview - The insurance industry is experiencing soft pricing, with global commercial insurance rates declining by 4% in Q3 after seven years of increases [1] - Natural catastrophe losses are expected to reach approximately $107 billion by 2025, primarily due to events like LA wildfires and severe storms in the U.S. [2] - The combined ratio for the insurance sector is projected to improve to 98.5% in 2025, supported by increased exposure and prudent underwriting practices [2] Berkshire Hathaway (BRK.B) - Berkshire Hathaway operates as a diversified conglomerate with over 90 subsidiaries across various industries, with insurance being a key segment contributing about 25% of total revenues [4] - The company benefits from a float-driven model that enhances earnings and provides capital for investments, supported by a strong cash reserve exceeding $100 billion [5][7] - Despite a return on equity (ROE) of 7.3%, which is below the industry average of 8%, Berkshire has shown improvement over time [8] - The Zacks Consensus Estimate for BRK.B's 2026 revenues indicates a 6% year-over-year increase, while EPS is expected to decline by 4.2% [17] Chubb Limited (CB) - Chubb is a leading provider of property and casualty insurance, boasting a diversified business model that enhances earnings stability [11] - The company anticipates an 8.6% increase in EPS by 2026, contrasting with BRK.B's expected decline [10] - Chubb maintains one of the lowest combined ratios in the industry due to disciplined underwriting practices and strategic mergers and acquisitions [14] - The Zacks Consensus Estimate for CB's 2026 revenues suggests a 6.5% year-over-year decrease, while EPS is projected to rise by 8.6% [18] Comparative Analysis - Chubb outperforms Berkshire in terms of ROE and dividend growth, making it a more attractive investment option [10][24] - Berkshire's price-to-book multiple is 1.53, above its five-year median of 1.44, while Chubb's is 1.52, below its median of 1.56 [19] - Chubb has a solid dividend track record, increasing dividends for 32 consecutive years, with a current yield of 1.3%, compared to Berkshire's lack of dividends [23]

Core Viewpoint - The Illinois appellate court ruled that payments made by an insured following a cyberattack, which were reasonable but not contractually necessary, do not qualify as insured "extra expense" under the cyber insurance policy [1][5][12] Group 1: Case Background - The case involved Villa Financial Services, which suffered a cyberattack on Kronos Group in 2021, leading to payroll processing issues and resulting in overpayments of $1.2 million to employees [2][3] - Villa sought coverage from its cyber insurance carrier for these overpayments, claiming they were incurred as "extra expense" due to the cyber event [3][4] Group 2: Court Rulings - The trial court ruled in favor of the insurer, stating that Villa failed to demonstrate that the overpayments were "necessarily incurred" as required by the policy [4][5] - The appellate court affirmed this ruling, emphasizing that the policy's language did not support reimbursement for payments that were not contractually required [6][7] Group 3: Policy Interpretation - The cyber policy defined "extra expense" as reasonable sums necessarily incurred to mitigate business interruptions caused by cyber events [4] - The court highlighted that the term "necessarily incurred" implies that expenses must be essential and indispensable for business operations, which Villa could not prove [6][11] Group 4: Comparison with Other Cases - The Villa decision contrasts with the Fifth Circuit's ruling in Southwest Airlines, where the court found that the term "solely" in a different policy context allowed for a broader interpretation of coverage [11] - The Villa case serves as a reminder of the importance of precise language in insurance contracts and the courts' reluctance to create coverage where none exists [12]

Financial Data and Key Metrics Changes - Adjusted net income for Q3 2025 was $18 million, with gross written premium growing by 33% year over year to $311 million, up from $234 million in Q3 2024 [5][13] - Net written premium increased by 30% year over year to $118 million, up from $91 million in Q3 2024 [15] - Consolidated net income for Q3 was $98 million, or $3.77 per diluted share, a $107 million improvement year over year [19] - Total shareholders' equity at the end of the quarter was $422 million, up 14% from $362 million at year-end 2024 [19][20] Business Line Data and Key Metrics Changes - Casualty increased to 25% of gross written premium, up from 14% last year, while commercial and multi-peril increased to 21%, up from 13% [14] - Homeowners decreased from 47% of gross written premium in Q3 2024 to 32% in Q3 2025 [14] - Renters increased to 22% of net written premium, up from 10% last year, with a significant growth of 203% year over year [15][16] Market Data and Key Metrics Changes - The company bound its first new policies with Westwood Insurance Agency, which is expected to triple access to annual new home closings [7] - The underwriting results improved significantly, with a net loss ratio improving by 25 percentage points year over year to 48% [9][17] Company Strategy and Development Direction - The company is focusing on three strategic pillars: strategic diversification, unlocking market growth, and optimized risk management [6] - The introduction of a new reporting structure aligns with a unified way of managing the business, emphasizing gross and net premium by line of business [12] - The company anticipates growth in the homeowners market over the next three years, aiming for over $2 billion in premium by 2028 [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underwriting discipline and the ability to maintain pricing standards amid increased competition [8] - The company raised its full-year 2025 guidance for gross written premium to a range of $1.09-$1.11 billion, reflecting expectations for continued growth in newer lines of business [20] - The consolidated net loss ratio guidance was improved to a range of 63%-64%, driven by positive loss trends [21] Other Important Information - The company appointed Robin Gordon as Chief Data Officer to enhance risk management and customer experience [10] - The consolidated combined ratio improved by 28 percentage points year over year to 100% [18] Q&A Session Summary Question: Growth in casualty business - Management noted that casualty growth is a combination of cyber, commercial general liability, and other lines, with a cautious approach to risk retention until profitability is established [25][26] Question: Competition in homeowners market - Management indicated that the admitted market is rebounding, leading to increased competition, but they feel confident in their pricing adequacy [27] Question: Future business mix by 2028 - Management expects to diversify further while anticipating growth in the homeowners market, aiming for over $2 billion in premium by 2028 [30][31] Question: Share repurchases and capital use - Management stated that capital will be used for portfolio growth and potential acquisitions to accelerate diversification [34]

Core Insights - Global commercial insurance rates fell by 4% in Q3 2025, marking the fifth consecutive quarterly decrease, driven by increased competition among insurers and favorable reinsurance pricing [1][3][5] - All global regions experienced year-over-year composite rate decreases, with the Pacific region seeing the largest decline at 11% [2][5] - Casualty rates increased by 3% globally, primarily due to an 8% increase in the US, while property rates declined by 8% globally [5] Summary by Category Global Insurance Market Trends - The overall composite rate in the US declined by 1% in Q3 2025, following a flat rate in Q2 2025 [2] - The trend of declining rates began in Q1 2021, reversing a seven-year period of increases [3] Regional Performance - The Pacific region experienced the largest composite rate decrease at 11%, followed by Latin America and the Caribbean (6%) and the UK (6%) [2] - Rates in Asia and India, as well as the Middle East and Africa, declined by 5% each, while Europe saw a 4% decrease and Canada a 3% decrease [2] Specific Insurance Lines - Property insurance rates declined by 8% globally, with the Pacific region experiencing a 14% decrease [5] - Financial and professional lines saw a 5% decrease globally, with the Pacific region experiencing the largest drop at 10% [5] - Cyber insurance rates decreased by 6% globally, with Europe seeing a 12% decline [5]

Core Insights - Asset managers are particularly vulnerable to cybercrime due to the sensitive data and large volumes of money they handle [1] - A survey revealed that 93% of investment management executives experienced at least one cyber incident in the past year, with nearly 20% facing multiple threats [2] Cybersecurity Risks - 88% of surveyed executives acknowledged that a successful cyberattack could lead to asset withdrawals or losses, with this figure rising to 94% among CFOs [3] - Concerns include operational disruption (63%), financial theft or fraud (47%), loss of client trust (46%), and increased insurance premiums (30%) [3] Preparedness and Response - Ransomware is the type of attack that 51% of executives feel least prepared to recover from [4] - While most leaders believe employees can recognize AI-driven threats, about one-third lack full confidence, and only 17% prioritize security awareness training in the coming year [5] Cybersecurity Spending - Over 78% of firms increased cybersecurity spending in the past year, with 88% of firms managing $101 million to $500 million in assets doing so [6] - Registered investment advisers were the least likely to increase security budgets, with only 57% doing so, and 11% significantly decreasing IT spending [6] Assessment Frequency - 41% of firms still rely on quarterly or less-frequent cybersecurity assessments, creating vulnerabilities that attackers can exploit [7]

Core Insights - Many U.S. homeowners lack essential insurance protections, creating opportunities for agents to educate clients on necessary coverages [1][4] - Homeowners often overestimate the protection offered by standard policies, highlighting the need for additional coverage for valuable items [2][3] Opportunities for Agents - Independent agents play a critical role in educating homeowners about evolving risks and coverage options [4] - After learning about umbrella coverage, two-thirds of unprotected homeowners expressed interest in obtaining it, with nearly 25% being "very interested" [5] - Customer service is crucial, with 81% of homeowners rating it as "absolutely essential" or "very important," compared to only 58% prioritizing the lowest price [5] Coverage Awareness - A significant gap exists in homeowners' awareness of various coverages; 87% had not been informed about cyber insurance, and 61% about umbrella coverage [6] - Despite high awareness of coverage for valuables (87%), only 26% of homeowners have additional coverage for them [7] - Cyber insurance has the lowest awareness at 46%, with only 7% of homeowners having coverage [9] Customer Preferences - Homeowners prefer having a single insurance company for all policies, which enhances customer service and helps identify coverage gaps [7][8] - Bundling policies can provide discounts and streamline the claims process, making it more convenient for homeowners [8]