A.M. Best Co. has affirmed the financial strength ratings of A+ (Superior) of the following subsidiaries of AXA Canada Inc.: AXA Assurances Inc. and AXA Assurances Agricoles Inc. (both of Montreal, Quebec) and the A (Excellent) rating of AXA Pacific Insurance Company (Vancouver, British Columbia).
The rating outlook for these companies is stable. Concurrently, A.M. Best has downgraded the financial strength ratings to A- (Excellent) from A (Excellent) of the following subsidiaries: AXA Insurance (Canada) and Anglo Canada General Insurance Company, (both of London, Ontario), and Insurance Corporation of Newfoundland Limited (ICON) (St. John’s, Newfoundland). The rating outlook for these companies is negative.
The affirmation of the ratings for AXA Assurances Inc., AXA Assurances Agricoles Inc. and AXA Pacific Insurance Company considers their respective capital positions, historically excellent underwriting and operating results, experienced management teams, disciplined underwriting standards and prudent utilization of reinsurance. These companies are also among the market leaders in their respective provinces.
Partially offsetting these strengths is pressure on the capitalization of AXA Assurances due to the performance of its subsidiaries, particularly Anglo Canada. In addition, the companies maintain expense structures above the national average; however, management has been successful in reducing the expense ratio.
The downgrade of the ratings for AXA Insurance (Canada) and Anglo Canada is a result of their weakened capital position and the adverse underwriting conditions that continue to persist for automobile insurance in Ontario. Capitalization has deteriorated due to weakened investment returns and poor underwriting performance driven by adverse loss development on their Ontario auto book of business.
The downgrade of ICON is primarily driven by the rating action of AXA Insurance (Canada), since the latter provides significant reinsurance protection to ICON via a quota share arrangement. The ratings will remain under pressure pending enhanced capitalization driven by improvement in their overall operating results or from additional capital infusions by the parent.
Offsetting these negative factors is the fact that the Ontario operations continue to maintain sound capitalization despite recent declines, as well as a conservative and disciplined underwriting strategy and focus. Additionally, the parent company, AXA Canada, Inc, has shown explicit financial support.
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