View this article online: https://www.insurancejournal.com/news/international/2002/01/24/16005.htm
A.M. Best announced that it has downgraded the financial strength ratings to A (Excellent) from A++ (Superior) for Allianz Insurance Company of Canada and its affiliated company, Trafalgar Insurance Company of Canada, collectively referred to as Allianz Canada.
“These rating actions reflect A.M. Best’s opinion concerning the treatment of Allianz Canada as a core subsidiary of Allianz AG, Munich, Germany. This is the result of the recent and significant deterioration in the overall financial position of Allianz Canada in failing to meet targeted earnings, as communicated to A.M. Best. Accordingly, Allianz Canada no longer qualifies for core treatment under A.M. Best’s group rating criteria,” said the announcement.
Poor underwriting results over the last two years have “eroded Allianz Canada’s very strong surplus position, and thus, its level of capitalization fell below A.M. Best’s expectations for a superior-rated company, the bulletin continued.
It sited intensely competitive market conditions and increased claims frequency, particularly with respect to its large Ontario auto business as the principle causes of the decline, and added that Allianz Canada had failed to maintain “its historical good results, which were in line with the parent’s expectations.” While auto premiums are rising, claims are increasing as well, which could slow the company’s recovery, Best indicated.
It indicated, however, that the superior financial strength and flexibility of Allianz AG offset some of the negative factors, and noted that the German parent had provided the Canadian group with explicit financial support. “Allianz Canada’s primary focus is to restore operating profitability over the near-term. Subsequently, Allianz Canada has developed and is implementing a business strategy aimed at improving underwriting performance within core businesses,” Best’s report concluded.