What’s New: In Brief (January 25, 2008)

FSCO has approved 2007 Q4 auto insurance rates that averaged +0.08% based on the entire market.
During 2007 Q4, for the 20.21% of the Ontario auto insurance market that had rate changes approved, the average rate change was +0.41%, when weighted by market share.
Rate changes approved over the past four years are as follows:
2004: -10.60%
2005: -2.43%,
2006: -1.27%
2007: +0.55%
Overall, the combined change in approved rates from 2004-07 is -13.75%.
In terms of individual companies’ requests in 2007 Q4, Kingsway General Insurance Company received approval for a 3.5% increase. Royal & SunAlliance received approval for a 4.5% increase.
Dominion of Canada General Insurance Company held the line on its auto insurance rates, with no rate change requested for the fourth quarter.

A.M. Best Co. has downgraded the financial strength rating (FSR) to A (Excellent) from A+ (Superior) of XL Capital Group (XL Capital) (Bermuda) and its members.
The outlook for this rating is stable.
“The rating action follows XL Capital’s recent announcement concerning [US]$1.5 billion to [US]$1.7 billion fourth quarter 2007 charges for credit-related investments, including the company’s exposure to the operations of Security Capital Assurance (SCA) (Bermuda),” A.M. Best announced in a press release.
“The charge also includes reserve increases related to reinsurance coverages provided by XL Capital to certain of SCA’s subsidiaries and a write-down of a publicly-traded financial affiliate.”
A.M. Best said the aforementioned charges related to SCA do not eliminate XL Capital’s exposures to SCA. “Furthermore, it is A.M. Best’s opinion that XL Capital has further subprime exposure through its D&O and E&O liability portfolio on both a primary and reinsurance basis.
“This exposure gives rise to concerns that there may be a potential resurgence in claims for these lines as they relate to subprime issues in the future.”