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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - FEBRUARY 23, 2011 12:00 AM (EST)
A.M. Best Co. has upgraded the financial strength rating to B+ (Good) from B (Fair) and issuer credit rating (ICR) to "bbb-" from "bb" of Peace Hills General Insurance Company (Peace Hills) (Alberta). The outlook for both ratings is stable.
The rating actions reflect Peace Hills' improved risk-adjusted capitalization and continued favorable operating performance. Peace Hills has continued to focus its efforts on underwriting core business lines, which contributed to the company's positive results in 2010. The management team has taken decisive action to help maintain future positive earnings by increasing rates and fostering ties to its independent brokers. Despite the realized capital losses suffered in 2008, net investment income also has been a steady contributor to equity. The company has reduced its exposure to equities and modified its investment policy to reallocate assets to reflect a more conservative mix.
These positive rating factors are partially offset by challenges due to continuing soft commercial market conditions, strong competitive market pressures and a recent trend of more frequent and severe weather-related events. These concerns are partially mitigated by Peace Hills' property catastrophe reinsurance protection provided by sound reinsurers that appears to reasonably protect equity in case of catastrophe events. A.M. Best anticipates that risk-adjusted capitalization will show modest improvement from earnings in the near term absent further unanticipated increases in frequency and/or severity of claims.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Catastrophe Risk Management Incorporated Within the Rating Analysis"; and "Understanding BCAR for Canadian Property/Casualty Insurers." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.