A.M. Best Downgrades the Ratings of Allianz Canada.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 23, 2002 A.M. Best Co. has downgraded the financial strength ratings to A (Excellent) from A++ (Superior) for Allianz Allianz SE[1], (ISIN: DE0008404005; IPA pronunciation: [alli-anz], and formerly AG) is a large financial service provider headquartered in Munich, Germany. Insurance Company of Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and its affiliated company, Trafalgar Insurance Company of Canada, both of Toronto, collectively referred to as Allianz Canada. These rating actions reflect A.M. Best's opinion concerning the treatment of Allianz Canada as a core subsidiary of Allianz AG, Munich, Germany. This is the result of the recent and significant deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the overall financial position of Allianz Canada in failing to meet targeted earnings, as communicated to A.M. Best. Accordingly, Allianz Canada no longer qualifies for core treatment under A.M. Best's group rating criteria. In 2000 and 2001, poor 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. 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. Allianz Canada's very 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. fell below A.M. Best's expectations for a superior-rated company. Allianz Canada's underwriting results -- which have for two consecutive years underperformed -- have been impacted by intensely competitive market conditions and increased claims frequency, particularly with respect to its large Ontario auto business. In 1998, the assignment of Allianz AG's group rating to Allianz Canada anticipated it maintaining its historical good results, which were in line with the parent's expectations. However, while A.M. Best believes Allianz Canada's prospects for more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. accident-year underwriting performance are achievable -- given the improved pricing in personal auto business -- rising claim costs may slow the recovery process. Offsetting these negative rating factors is the superior financial strength and flexibility of Allianz AG. These attributes strengthen Allianz Canada's strategic position and role within the Allianz AG organization. Furthermore, in 2001, Allianz AG provided the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. group with explicit financial support. Allianz Canada's primary focus is to restore operating profitability over the near-term. Subsequently, Allianz Canada has developed and is implementing a business strategy aimed at improving underwriting performance within core businesses. 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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