A.M. Best Co. announced that it has affirmed the financial strength rating of “A-” (Excellent) of Royal & Sun Alliance Insurance Pool of Canada (RSA Pool) (Toronto), consisting of Royal & Sun Alliance Insurance Company of Canada, Western Assurance Company (both of Ontario) and Quebec Assurance Company (Quebec).
Best also announced that it has revised the group’s rating outlook to negative from stable.
“The rating reflects RSA Pool’s adequate capitalization, its prominent position in the Canadian property and casualty marketplace, improvements to underwriting and operating performance through 2003 and its core position within its parent company, the Royal & Sun Alliance Insurance Group plc (United Kingdom),” said Best.
“Partially offsetting these positive rating factors is the ongoing challenge to improve underwriting and operating results commensurate with past historical performance. In addition, as a large writer of Ontario auto, the RSA Pool will be challenged to improve its loss experience in this difficult line of business,” the bulletin noted. “High claim costs and lack of significant regulatory reform will continue to adversely impact underwriting results.
“The negative outlook considers A.M. Best’s concerns with its parent regarding near-term uncertainties surrounding the parent’s reorganization of its risk profile, meeting performance benchmarks and its reserve adequacy, particularly with regards to asbestos and environmental liabilities in the United States. The outlook further recognizes that the RSA Pool will not fully realize the benefits of its corrective actions until 2004.”
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