S&P’s affirms A+ rating for Aviva Canada subsidiaries

Standard & Poor’s Ratings Services has assigned an ‘A+’ financial strength rating to S&Y Insurance Co., and affirmed its A+ financial strength rating for other Aviva Canada subsidiaries.
The rated subsidiaries include Aviva Insurance Co. of Canada, Elite Insurance Co., Pilot Insurance Co., Scottish & York Insurance Co. Ltd. and Traders General Insurance Co.
The outlook on these ratings is stable.
“The ratings on Aviva Canada reflect its position as the second-largest property and casualty insurer in Canada with about 9% market share, good multi-channel distribution network, good product mix, robust capital position, strong support from [its] parent [company] and very conservative and liquid investment portfolio,” Standard & Poor’s credit analyst Foster Cheng said in a press release.
“The company faces challenges from its lack of brand awareness in the Canadian market, past strategy execution issues, a competitive market, and its high auto insurance exposure.”
Standard & Poor’s went on to note that despite its small size and limited operating history, S&Y Insurance is seen as “a core operating unit” within Aviva Canada and represents a growing distribution channel for the company.
S&Y Insurance was started in 2003.
“Together with its sister company, Scottish & York, [S&Y Insurance Company] offers a direct channel distribution of personal insurance products through corporate partnerships.”
Despite a softening and competitive operating environment, S&P’s predicted Aviva Canada would produce a combined ratio of between 98%-100%; a ROE between 13%-15%; and a minimum capital test (MCT) of 170% or higher for each of its operating subsidiaries and on a consolidated basis for the remainder of 2007 and into 2008.