A.M. Best Co. announced that it plans to withdraw its Canadian public data (pd) rating assignments on or about August 31, 2010.
It will assign a category NR-5 (Not Formally Followed) to the financial strength ratings and an “nr” to the issuer credit ratings of current pd rated P/C insurers. Best said it “is providing this advance notice to various market participants in the interest of transparency,” and stressed that it would continue to maintain its interactive ratings with Canadian P/C and life insurers.
“The withdrawal of the pd rating assignments is a reflection of the increasing challenges facing the Canadian property/casualty industry,” Best explained. “These challenges include upcoming changes in accounting standards and active regulatory environment, especially in provinces with private automobile insurance systems. In addition, volatility in the investment markets and a trend of more frequent and severe weather-related events make it more difficult to assign ratings based solely on public data.”
The announcement also noted that “pd ratings do not include analysis based on routine interaction with insurance company management, ongoing monitoring of non-public financial or strategic information or any affiliations that property/casualty insurers have with parents/affiliates.”
Best said its pd ratings “reflect a quantitative analysis of each company’s results based on publicly available financial information at a specific point in time. In this case, currently published ratings reflect financial data as of year-end 2008.” As a result Best will not update the ratings for 2009 financial information.
However, Best also pointed out that it “remains committed to providing ratings of the Canadian property/casualty and life insurance industries.” It currently “interactively rates 175 companies inclusive of individual property/casualty, life companies and Canadian branches.”
Source: A.M. Best
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