A.M. Best Removes Ratings of Aviva Insurance Company of Canada and Its Affiliates From Under Review
A.M. Best Co. has removed from under review with negative implications and affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a+” of Aviva Insurance Company of Canada and its affiliates, Elite Insurance Company, Traders General Insurance Company, Pilot Insurance Company, Scottish & York Insurance Company, Limited and S&Y Insurance Company. The outlook assigned to the FSR is stable, while the outlook assigned to the ICRs is negative. These companies are insurance subsidiaries of their ultimate parent company, AVIVA plc (United Kingdom).
In June 2012, A.M. Best maintained the under review status for Aviva Insurance Company of Canada and its affiliates' ratings due to its strategic evaluation of Aviva plc's businesses and changes to its senior management, especially the departure of the chief executive officer.
The main drivers for the rating affirmations are AVIVA plc's improving risk-adjusted capitalization as at June 2012, significant measures put in place by the parent to improve financial performance and the ultimate capital position in the medium term by narrowing AVIVA plc's business profile. A.M. Best expects that the stability of senior management and its strategic plans will be prioritized by any new chief executive officer appointed in 2013.
The outlook assigned to the ICRs is negative as A.M. Best believes that the execution risks associated with AVIVA plc's plan to exit or restructure some business segments is high in the current economic environment, since the group is likely to experience temporary pressure in earnings and the full results of the plan are not expected to be seen before the end of 2014. A.M. Best notes that AVIVA plc's extension of its debt de-leveraging timetable also has a bearing on the ICRs' negative outlook.
Aviva Insurance Company of Canada and its affiliates' ratings continue to reflect their leading position in the property/casualty market, along with their continued strong operating performance.
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. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Canadian Property/Casualty Insurers”; “Catastrophe Analysis in A.M. Best Ratings”; and “Rating Members of Insurance Groups.” Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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A.M. Best Co.
Jacqalene Catrino Lentz, (908) 439-2200, ext. 5762
Senior Financial Analyst
Greg Williams, (908) 439-2200, ext. 5815
Managing Senior Financial Analyst
Rachelle Morrow, (908) 439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, (908) 439-2200, ext. 5644
Assistant Vice President, Public Relations