OLDWICK, N.J., December 17 /CNW/ - A.M. Best Co. has assigned an issuer
credit rating (ICR) of "a-" and affirmed the financial strength rating (FSR)
of A- (Excellent) of SGI CANADA (SGI) (Saskatchewan). A.M. Best also has
assigned ICRs of "bbb+" and "bbb" and affirmed the FSRs of B++ (Good) of SGI's
wholly owned subsidiary, SGI CANADA Insurance Services Limited (SCISL)
(Manitoba) and SCISL's majority owned subsidiary, The Insurance Company of
Prince Edward Island (ICPEI), respectively. The outlook for these ratings is
Concurrently, A.M. Best has upgraded the FSR to B (Fair) from B- (Fair)
and assigned an ICR of "bb+" to SCISL's wholly owned subsidiary, Coachman
Insurance Company. The outlook for the FSR has been revised to positive from
stable, and the outlook assigned to the ICR is positive.
The affirmation of the ratings of SGI, SCISL and ICPEI are reflective of
their respectively strong, liquid balance sheets, modest leverage positions,
historical profitability trends and business profiles within their respective
markets. In addition, the subsidiaries' ratings benefit from the explicit
financial and operating support of SGI.
These rating strengths are offset in part by each company's concentration
of risk in its respective province, heightened competitive market pressure,
rising claims cost inflation and potential earnings volatility from industry
wide changes to fair value accounting in Canada. These concerns are partially
mitigated by SGI's experienced management team, the greater geographic and
product line diversification from an expansion initiative and by a
comprehensive reinsurance program to protect surplus.
The FSR upgrade is reflective of Coachman's much improved risk-adjusted
capitalization, improved profitability, slower premium growth and the explicit
financial support of SGI.
These positive rating factors are partially offset by Coachman's history
of poor profitability, concentration of risk in the Ontario automobile market,
increased competitive market pressures and rising claims cost inflation.
However, the company is diversifying its product line and benefits from the
operational support and reinsurance protection of SGI.
For Best's Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.
Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.
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