CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 15, 2004 12:00 AM (EDT)
A.M. Best Co. has assigned a financial strength rating of B++ (Very Good) to BCAA Insurance Corporation (BCAAIC) (British Columbia, Canada). The rating outlook is stable.
The rating reflects BCAAIC's excellent risk-adjusted capitalization, strong management team, conservative underwriting practices, sound reinsurance program and the explicit financial support from its ultimate parent, British Columbia Automobile Association (BCAA) (British Columbia, Canada). These rating strengths are partially offset by BCAAIC's geographic concentration in British Columbia, a higher than average expense structure and a higher investment risk due to the company's above average investment in equities.
BCAAIC insures primarily personal property risks in British Columbia. Its principle clients are members of BCAA. Products are distributed through the BCAA Insurance Agency, which has 23 sales centers and a large contact center. As an affiliate of the Canadian Automobile Association (CAA), BCAAIC intends to work with other CAA clubs to offer its products to their members.
BCAAIC's capitalization is excellent. The company's combined ratios have historically outperformed the industry due to disciplined underwriting and conservative reserving practices. This has resulted in below average net loss ratios and a history of reserve redundancies. However, BCAAIC is concentrated in British Columbia and subject to the risks associated with earthquake loss and regulatory changes. Furthermore, BCAAIC's investment strategy bears higher risks associated with changes in the investment markets as a result of its above average investment in common shares. BCAAIC relies heavily upon reinsurance to mitigate its earthquake exposure, and its strategy to diversify into other provinces in Canada should be beneficial.
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A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.