Best Upgrades ‘PD’ Ratings of 12 Canadian P/C Insurers

June 20, 2006

A.M. Best Co. has upgraded the public data (pd) financial strength ratings of 12 property/casualty Canadian insurers. The bulletin noted that “pd ratings are based solely upon public information and present the most informed view A.M. Best can offer, short of an insurer participating in the full interactive rating process.”

The pd rating upgrades, Best indicated, “are reflective of stronger capitalization and improved operating performance for each of the companies. In recent years, improved operating performance and capitalization has been in direct correlation with auto reforms throughout many of the provinces in Canada, as well as lower claims frequency and more adequate pricing. Based on company-specific and industry-wide financial analysis, A.M. Best anticipates these companies in the near term will be able to maintain their favorable operating performance and capital strength during the apparent downturn in the underwriting cycle.”

Best also noted that its pd ratings are assigned to insurers in select markets that do not subscribe to its interactive rating process. Best said it “uses the same rating scale and definitions as it does for its long-term financial strength interactive ratings but applies a pd rating modifier to ensure the user is aware of the more limited information basis for the rating.”

By contrast, Best explained, an interactive rating is produced at the request of the insurer. It “includes detailed interviews of senior management and access to non-public data and other information. The pd rating process is based on statutory filings of the companies and an A.M. Best committee review of the company’s financial strength, along with current market conditions in which the company operates. Currently, the companies that participate in the interactive rating process collectively represent a significant percentage of market share in the Canadian property/casualty industry.”

Best upgraded the following Canadian P/C Companies:
Alberta Motor Association Insurance Company A- (Excellent)
Allstate Insurance Company of Canada A- (Excellent)
Alpha Assurance Company A- (Excellent)
Certas Direct Insurance Company B+ (Very Good)
Economical Mutual Insurance Company B++ (Very Good)
Farmers’ Mutual Insurance Company (Lindsay) B++ (Very Good)
Gore Mutual Insurance Company B++ (Very Good)
Pictou County Farmers Mutual Fire Insurance Company B++ (Very Good)
TD General Insurance Company B+ (Very Good)
The Personal Insurance Company B+ (Very Good)
Traders General Insurance Company B+ (Very Good)
Waterloo Insurance Company B++ (Very Good)

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