CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - DECEMBER 04, 2008 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Royal & Sun Alliance Insurance Company of Canada (RSA Canada) and Quebec Assurance Company (Quebec Assurance) (Quebec, Canada). A.M. Best also has upgraded the FSR to A- (Excellent) from B++ (Good) and ICR to "a-" from "bbb" of Western Assurance Company (Western Assurance) (Toronto, Canada). Together these members are known as RSA Group of Canada. In addition, A.M. Best has affirmed the FSR of B+ (Good) and ICR "bbb-" of Ascentus Insurance Ltd. (Ascentus) (Toronto, Canada). Additionally, A.M Best has upgraded the FSR to B (Fair) from C+ (Marginal) and ICR to "bb" from "b-" of Unifund Assurance Company (Unifund) (St. John's, Canada). Canadian Northern Shield Insurance Company (CNS) (Vancouver, Canada) formerly had a Best's public data (pd) rating when under a prior owner; however, now it has an interactive FSR of B (Fair) and ICR of "bb+". The outlook for all ratings is stable.
The rating actions of RSA Canada, Quebec Assurance and Western Assurance reflect A.M. Best's viewpoint that the group maintains strong risk-adjusted capitalization, solid investment income and sound reserve development. The group has produced solid underwriting results, which have consistently increased equity over the last five years. Collectively, the group provides commercial property and casualty coverage as well as personal and specialty coverages throughout Canada.
The companies' maintain a presence in all of the Canadian provinces and distribute their product range through multiple distribution channels, including a large independent broker network.
The ratings of Ascentus are based on its solid level of capitalization, which supports its underwriting and investment risk. The level of premium volume has sharply declined in recent years, since all private passenger auto and personal property business was renewed into RSA Canada.
The upgrades of Unifund's FSR and ICR are based on its improved risk-adjusted capitalization, consistent operating performance and favorable reserve development. Historically, Unifund has been a growth vehicle for the overall Canadian organization. In prior years, rapid premium expansion outpaced equity growth, which resulted in elevated underwriting leverage measures and a sharp decline in overall risk-adjusted capitalization. More recently, premium levels have stabilized, equity has increased and overall risk-adjusted capitalization has improved. The company primarily is a writer of personal lines insurance for associations and groups throughout Ontario, Alberta, Newfoundland and Labrador and Nova Scotia.
The ratings of CNS reflect its elevated underwriting leverage, high underwriting expenses and adequate operating performance. The acquisition of CNS affords RSA Canada improved geographic diversity, increased distribution and growth opportunities within British Columbia where a majority of its premiums are written. CNS is licensed to offer several different products, which include personal property, commercial property, liability and auto.
Going forward, A.M. Best remains concerned about softening market conditions, fierce competition and the long-term benefits of regulated product reforms to auto insurance in the core operating territories of Ontario and Alberta. As a result, all RSA Canada companies will be challenged to maintain current levels of profitability.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.