A.M. Best has affirmed the financial strength rating (FSR) of A-
(Excellent) and issuer credit ratings (ICR) of "a-" of Co-operators
General Insurance Company (Co-operators General) and its subsidiary, The
Sovereign General Insurance Company (Sovereign) (Alberta).
In addition, A.M. Best has affirmed the FSR of A (Excellent) and ICR of
"a" of Co-operators Life Insurance Company (Co-operators Life)
(Saskatchewan). The outlook for all ratings is stable.
Concurrently, A.M. Best has withdrawn the debt ratings of "bbb-" of the
preferred shares of CAD 100 million 5% non-cumulative redeemable Class E
preference shares, Series C [TSX: CCS.PR.C] and CAD 115 million 7.25%
non-cumulative five-year reset Class E preference shares, Series D [TSX:
CCS.PR.D] issued by Co-operators General.
Co-operators General, Sovereign and Co-operators Life are part of The
Co-operators Group Limited. All companies are domiciled in Ontario,
unless otherwise specified.
The ratings of Co-operators General recognize its solid risk-adjusted
capitalization, profitable operating performance, strong brand name
recognition, product line and geographic diversifications, as well as
the effective use of its subsidiaries and multiple channels of
Partially offsetting these strengths are strong competitive market
pressure, a trend of more requent and severe losses from storms across
Canada, as well as the uncertainty surrounding the impact of mandatory
rate reductions in Ontario auto lines.
The ratings of Sovereign acknowledge its continued favorable operating
performance, solid risk-adjusted capital position and its strategic
position of importance to the entire organization.
Partially offsetting these positive rating factors are the soft
commercial lines pricing and historically higher expense ratio. However,
these concerns are mitigated by the explicit financial support and
guarantee provided by Co-operators General.
The ratings for Co-operators Life reflect its strong capital position
(both on an absolute and risk-adjusted basis), increased operating
earnings and growth in premiums within its core business segments. The
company offers a wide variety of products to individual, group and
credit union markets throughout Canada.
Partially offsetting these strengths are the continued losses in
Co-operators Life's group business and the challenges it faces regarding
competition from larger players in the Canadian life market.
Furthermore, earnings have been constrained in recent periods by the
impact of the low interest environment, which has led to some product
The ratings and outlook of the organization could benefit from a
consistently favorable earnings trend that outperforms its peers while
maintaining strong risk-adjusted capitalization. However, negative
rating pressure could occur if an unfavorable earnings trend develops
and capital erodes.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS
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