Standard & Poor’s puts Allianz Canadian ops on watch

Rating agency Standard & Poor’s has put the Canadian operations of Allianz Allianz Insurance Co. of Canada and Trafalgar Insurance Co. of Canada on “creditwatch” with negative implications. The companies combined hold an “A+” financial strength rating currently.
S&P says the move is the result of poor operating performance and lack of profitability over the past two years. The rating agency also has concerns over the company’s operational risks as a result of its restructuring moves, and its strategic importance to parent company Allianz AG.
“Whereas Standard & Poor’s has recognized that AZ Canada has started to benefit from operational strategies implemented since 2001 and prior-year development in certain risk classes, a changing business mix and new business model execution continue to strain the company’s operating performance and earnings potential,” says S&P credit analyst Frederick Loeloff. He notes that the companies have had four years of poor results and the turnaround as of mid-2003 has not lived up to expectations.
Following a review and discussions with the company, S&P says ratings could be affirmed or lowered one to three notches.