A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of “a-” of Co-operators General Insurance Company (Co-operators General) (Ontario). A.M. Best has also upgraded the FSR to B++ (Very Good) from B+ (Very Good) and the ICR to “bbb” from “bbb-” for Co-operators General’s wholly owned subsidiary, The Sovereign General Insurance Company (Sovereign) (Alberta). In addition, A.M. Best has affirmed the FSRs of B+ (Very Good) and the ICRs of “bbb-“of Co-operators General’s other wholly owned subsidiaries, L’Union Canadienne Compagnie D’Assurances (L’Union) (Quebec) and COSECO Insurance Company (COSECO) (Ontario). The outlook for all ratings is stable. “The ratings of Co-operators General reflect its superior capitalization and balance sheet strength, profitable operating performance and experienced management team,” A.M. Best noted in a press release. “The ratings also take into consideration the company’s market leadership position, driven by its strong brand name recognition, product line and geographic diversification and effective use of its multi-channel distribution system.” At the same time, A.M. Best observed, “partially offsetting these positive rating factors are the current downturn in the underwriting cycle for commercial lines products, uncertainty of the long-term effects of regulated pricing and product changes for auto insurance and potential earnings volatility from subsidiary operations.” A.M. Best said Sovereign’s ratings “are reflective of its improved risk-adjusted capitalization and strong, liquid balance sheet, positive profitability trend, explicit and implicit parental support and its strategic role within the Co-operators group.” Sovereign offers primarily mid to small commercial lines coverage through independent brokers across Canada. “Leverage ratios have improved from strong organic surplus growth while premium risk growth has remained relatively flat,” A.M. Best noted. “In addition, the company benefits from cross marketing opportunities and services it receives from affiliated companies.” A.M. Best said Sovereign’s rating strengths “are offset in part by Sovereign’s history of reserve deficiencies, moderate exposure to property loss due to earthquakes in western Canada, as well as competitive pricing pressure in its core commercial lines.” These concerns are mitigated, in part, by management’s actions to focus on core business by exiting less profitable personal lines and increasing reserves, said the ratings agency. “In addition, surplus is protected by a comprehensive reinsurance program with primarily high quality reinsurers.” The ratings of L’Union and COSECO recognize their respective financial strengths and historically profitable operating performance, their strategic roles within the Co-operators group, as well as each company’s individual challenges within their market niches, A.M. Best reported.