Allianz, Trafalgar downgraded by A.M. Best

Despite improving financial results, A.M. Best has downgraded the financial strength ratings of Allianz Insurance Co. of Canada and subsidiary Trafalgar Insurance Company of Canada. Allianz dropped to “A-” (excellent) from “A”, while Trafalgar fell to “B+” (very good) from A. Each has also been assigned a negative outlook.
The downgrade comes despite acknowledge improved results by the companies, with A.M. Best saying the improvement has been too slow in coming, dragged down by auto loss costs in Ontario and Alberta. As well, the rating agency questions the relationship of the Canadian companies to their parent, Allianz AG, citing the reduced capital position of Allianz and Trafalgar. A.M. Best speculates that while Allianz remains a strategic subsidiary, “it now views Trafalgar in an ancillary role”.
The rater also notes the continued struggles of Allianz AG in its life and banking operations, and this strain this may put on the ability to support subsidiaries.