A.M. Best affirms Royal’s ‘A-‘ rating; outlook negative

A.M. Best Co. has affirmed the financial strength ratings of A- (Excellent) for both Royal & Sun Alliance Company of Canada and Quebec Assurance Co.
A.M. Best also affirmed the financial strength rating of Ascentus Insurance Ltd. at B+ (Very Good).
Additionally, A.M Best downgraded the financial strength rating of Unifund Assurance Co. (Newfoundland) to C (Marginal) from B++ (Very Good) and Western Assurance Co. to B++ (Very Good) from A- (Excellent).
All the above companies are subsidiaries of Royal and SunAlliance Canada Group. All companies are located in Ontario, unless otherwise specified.
All ratings have a negative outlook.
“The ratings of Royal & SunAlliance Canada and Quebec Assurance reflect A.M. Best’s opinion that their respective stand alone risk-based capitalization comfortably supports both underwriting and investment risk,” A.M. Best announced in a release. “Furthermore, the ratings also take into consideration both companies’ overall profitable operating performance.”
The rating of Ascentus is based on its adequate level of capitalization to support its underwriting and investment risk, A.M. Best said.
A.M. Best said it is “concerned” Unifund and Western Assurance will be challenged to maintain positive trends during softening market conditions. “In A.M. Best’s opinion, there is an imbalance in the capitalization among the Canadian companies arising in part from the differing rates of growth; as a consequence, Unifund and Western Assurance’s ratings reflect that the overall capitalization has weakened relative to existing underwriting and investment risk and no longer supports their current rating levels.”
A.M. Best said its negative outlook “is largely driven by issues unique to the Canadian companies, such as the historical dependence on investment income and softening market conditions. The outlook also considers the uncertainties in respect to Royal & Sun Alliance Insurance Group plc’s (United Kingdom) runoff of its discontinued business in the United States.”