A.M. Best Downgrades Rating of Co-operators General and Its Subsidiaries.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 13, 2002 A.M. Best Co. has downgraded the financial strength rating to B++ (Very Good) from A (Excellent) of Co-operators General Insurance Company (Guelph, Ontario Guelph (IPA: gwɛlf) (population 114,943[1]) is a city located in the Southwestern region of Ontario, Canada. ). Additionally, A.M. Best has downgraded the financial strength ratings of its subsidiaries to B+ (Very Good) from A- (Excellent) and has assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. a financial strength rating of B+ (Very Good) to Co-operators of Canada 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. International Limited, (Co-operators of Canada) (Dublin, Ireland). The subsidiaries are Sovereign General Insurance Company (Calgary, Alberta); L'Union Canadienne Compagnie d'Assurances (Sillery, Quebec); and COSECO Insurance Company (Guelph, Ontario). Co-operators of Canada serves as a reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. of affiliated business, primarily composed of Co-operators General's personal property book. The outlook for all ratings has been changed from negative to stable. The rating action reflects Co-operators General's deteriorated capital position and unfavorable 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. trends. Poor underwriting results eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. Co-operators General's strong surplus position, and thus, its level of capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. has fallen below A.M. Best's expectations for an Excellent-rated company. Underwriting results have been impacted by rising loss costs that have outpaced premium increases, especially in the company's core Ontario auto business. A.M. Best expects Co-operators General's prospects for improved underwriting performance in the near term will be challenged by continuing loss cost inflation, despite improved pricing in the personal auto market. Partially offsetting these negative rating factors is Co-operators General's strong presence as the largest Canadian-owned property/casualty insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. in the Canadian market. Management's primary focus is to reverse current trends while maintaining its standing in the market, including implementing rate increases, exiting unprofitable portfolios and diversifying its product mix. The ratings for the three subsidiaries recognize their strategic distribution role. Sovereign and L'Union serve as Co-operators General's primary vehicles for distribution through independent brokers, while COSECO distributes through employer and association groups including direct response marketing to the general public. The rating change is attributed to mixed operating results in the subsidiaries and increased underwriting leverage. The companies will be challenged to generate consistently favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. underwriting results to raise surplus level and support their premium growth. In addition, A.M. Best has lowered the financial strength rating to A- (Excellent) from A (Excellent) of Co-operators Life Insurance Company (Regina, Saskatchewan). This rating action considers the challenges facing the ultimate parent organization, Co-operators Group Limited, to support its property/casualty operations due to limited financial flexibility. Co-operators Life continues to experience excellent results from its life, health and group operations. 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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