A.M. Best Upgrades Rating of Peace Hills General Insurance Company.OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating to B+ (Very Good) from B (Fair) of Peace Hills General Insurance Company (Peace Hills) (Alberta, Canada). The rating outlook is stable. The rating reflects Peace Hills' excellent 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. and strong balance sheet, profitable operating performance, sound liquidity and conservative reserve position. Partially offsetting these rating strengths are the company's elevated leverage position, above average investment risk with below average returns, as well as its concentration of risk in the challenging property/casualty insurance market in Alberta. Peace Hills' risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. (BCAR BCAR Brunswick County Association of Realtors BCAR British Civil Airworthiness Requirements BCAR Bullitt County Animal Rescue (Shepherdsville, KY) BCAR Business Case Analysis Report BCAR Beaver Creek Array BCAR Buffalo Civic Auto Ramps, Inc. ), is excellent and reflective of the company's strong balance sheet relative to the risks it assumes. The improvement in the company's results has been achieved through controlled growth and sound 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. which has produced better than average profitability over the last five years. Peace Hills' profitability has benefited from the company's conservative reserving practices, having consistently produced redundancies on both a calendar year and accident year basis. Leverage ratios have trended downward; however, they remain above the industry norm, indicating an above average exposure to pricing errors and underestimation of policyholders' liabilities. Investment risk is also elevated due to Peace Hills' above average investment in common shares. Investment returns have also lagged behind the industry average. Furthermore, Peace Hills' is primarily concentrated in the province of Alberta which exposes the company to severe weather related risks, localized Translated into the spoken language of the country. See localization. market competition, and regulatory constraints. A.M. Best remains concerned about the effects that recent regulatory changes to the Alberta automobile insurance product will have upon long-term profitability. These concerns are partially mitigated by the company's experienced management team and a comprehensive 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. program with quality reinsurers to protect surplus. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. 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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