Westminster American Insurance Co.’s financial strength rating was upgraded in response to the insurer’s favorable risk-adjusted capitalization and improved operating performance, according to a ratings service.

A.M. Best Co. upgraded the financial strength rating to “B++” (Good) from “B+” (Good) and issuer credit rating to “bbb+” from “bbb-” for the Westminster, Md.-based company. The outlook for both ratings has been revised to “stable” from “positive.”

A.M. Best said Westminster’s strong capital position is derived from the 2005 demutualization, several years of positive operating results and a capital contribution from its new owner.

The ratings service also noted that the carrier’s new management team, which has been overseeing Westminster’s operations since 2005, “continues to implement strategies that have improved the company’s operating performance and increased policyholders’ surplus.”

That management team is “focused on growing its commercial book of business and, as such, continues to enhance the company’s product offerings and technology capabilities,” A.M. Best said.

Formed as the Mutual Fire Insurance Co. of Carroll County in 1870, Westminster American Insurance Co. has expanded from writing only homeowners and farm owners properties to providing property-casualty coverage in Maryland, Washington, D.C., and Pennsylvania.

However, partially offsetting the positive rating factors is Westminster’s geographic concentration of property risks in Maryland and Washington, D.C., which exposes the company to weather-related events and potential market pressures, as well as the financial leverage at the holding company, Westminster American LLC, A.M. Best reported. The ratings service also noted that the underwriting expense ratio is elevated due to reinsurance costs, automation improvement expenses and other general operating expenses.