A.M. Best Affirms Rating for Commonwealth.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 21, 2002 A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) for Commonwealth Insurance Company, Canada, and its subsidiary Commonwealth Insurance Company of America, Seattle, collectively known as Commonwealth Insurance Companies, and has removed the rating from under review. This rating reflects Commonwealth's very strong capital position and history of profitable operations. This capital position is supported internally and externally through earnings and the explicit support of its ultimate parent, Fairfax Financial Holdings Fairfax Financial Holdings Limited TSX: FFH.SV NYSE: FFH is a Toronto, Ontario based financial services holding company which, through its subsidiaries, is engaged in property, casualty and life insurance and reinsurance, investment management and insurance claims Limited. These strengths are also indicative of Commonwealth's experienced and stable management team and staff and their expertise in underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. large commercial and energy risks. Commonwealth's earnings are further supported by substantial reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. protections. These extensive reinsurance treaties Reinsurance Treaty (June 18, 1887) Secret agreement between Germany and Russia. Arranged by Otto von Bismarck after the collapse of the Three Emperors' League, it provided that each party would remain neutral if either became involved in a war with a third nation, and that give Commonwealth the capacity to write large exposures. Partially offsetting these strengths are recently poor underwriting results, which have been affected by unusual frequency of large losses and competitive pricing. Commonwealth's concentration in large industrial risks exposes it to large shock losses. Commonwealth is currently trying to lessen this exposure and the exposure to loss frequency by taking smaller lines in the larger, more volatile risks by obtaining higher deductibles or moving into higher layers of insurance and geographically diversifying its writings. In 2002, these measures in conjunction with the hardening hardening, in metallurgy, treatment of metals to increase their resistance to penetration. A metal is harder when it has small grains, which result when the metal is cooled rapidly. market are expected to improve results substantially. However, A.M. Best has assigned a negative outlook to Commonwealth due to continuing uncertainties regarding reserve adequacy and the turnaround of the operating performance of its direct parent, TIG n. 1. A game among children. See Tag. 2. A capacious, flat-bottomed drinking cup, generally with four handles, formerly used for passing around the table at convivial entertainment. Insurance Group. Constraining con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. TIG's ability to affect a turnaround in the near-term is its reliance on third-party administrators in claims handling and managing general agents in underwriting and pricing. Commonwealth's rating will be contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent TIG's and Commonwealth's ability to execute its business strategy in accordance with its own and A.M. Best's expectations. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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