AM Best

A.M. Best Affirms Ratings of Co-operators General Insurance Company, Its Subsidiary and Co-operators Life Insurance Company


Jacqalene Lentz—P/C
Senior Financial Analyst
(908) 439-2200, ext. 5762

Edward Kohlberg—L/H
Senior Financial Analyst
(908) 439-2200, ext. 5664

Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - MAY 21, 2014 11:29 AM (EDT)
A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Co-operators General Insurance Company (Co-operators General) and its subsidiary, The Sovereign General Insurance Company (Sovereign) (Alberta).

In addition, A.M. Best has affirmed the FSR of A (Excellent) and ICR of "a" of Co-operators Life Insurance Company (Co-operators Life) (Saskatchewan). The outlook for all ratings is stable.

Concurrently, A.M. Best has withdrawn the debt ratings of "bbb-" of the preferred shares of CAD 100 million 5% non-cumulative redeemable Class E preference shares, Series C [TSX: CCS.PR.C] and CAD 115 million 7.25% non-cumulative five-year reset Class E preference shares, Series D [TSX: CCS.PR.D] issued by Co-operators General.

Co-operators General, Sovereign and Co-operators Life are part of The Co-operators Group Limited. All companies are domiciled in Ontario, unless otherwise specified.

The ratings of Co-operators General recognize its solid risk-adjusted capitalization, profitable operating performance, strong brand name recognition, product line and geographic diversifications, as well as the effective use of its subsidiaries and multiple channels of distribution.

Partially offsetting these strengths are strong competitive market pressure, a trend of more frequent and severe losses from storms across Canada, as well as the uncertainty surrounding the impact of mandatory rate reductions in Ontario auto lines.

The ratings of Sovereign acknowledge its continued favorable operating performance, solid risk-adjusted capital position and its strategic position of importance to the entire organization.

Partially offsetting these positive rating factors are the soft commercial lines pricing and historically higher expense ratio. However, these concerns are mitigated by the explicit financial support and guarantee provided by Co-operators General.

The ratings for Co-operators Life reflect its strong capital position (both on an absolute and risk-adjusted basis), increased operating earnings and growth in premiums within its core business segments. The company offers a wide variety of products to individual, group and credit union markets throughout Canada.

Partially offsetting these strengths are the continued losses in Co-operators Life's group business and the challenges it faces regarding competition from larger players in the Canadian life market. Furthermore, earnings have been constrained in recent periods by the impact of the low interest environment, which has led to some product redesigns.

The ratings and outlook of the organization could benefit from a consistently favorable earnings trend that outperforms its peers while maintaining strong risk-adjusted capitalization. However, negative rating pressure could occur if an unfavorable earnings trend develops and capital erodes.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

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