A.M. Best Co. has affirmed the financial strength rating of ‘A+’ (Superior) and issuer credit ratings (ICR) of “aa-” of Intact Insurance Group and its members: Belair Insurance Company Inc. (Montreal, Quebec), Intact Insurance Company, Novex Insurance Company, The Nordic Insurance Company of Canada and Trafalgar Insurance Company of Canada.
Best also affirmed the ICR of “a-” as well as the debt ratings of “a-” on CAD 250 million (US $242.56 million), Series 1, 5.41 percent senior unsecured medium-term notes due September 3, 2019; “a-” on CAD 250 million (US $242.56 million), Series 2, 6.40 percent senior unsecured medium-term notes due November 23, 2039; and “a-” on senior unsecured debt securities, “bbb+” on subordinated unsecured debt securities and “bbb” on Class A preferred shares included in the CAD 2 billion (US $1.94 billion) Preliminary Short Form Base Shelf Prospectus issued May 13, 2009 of the Group’s holding company, Intact Financial Corporation (IFC).
The outlook for all ratings is stable. All companies are domiciled in Toronto, Ontario, unless otherwise specified. IFC is the former ING Canada Inc.
Best said the ratings are “reflective of the Group’s superior capitalization, strong historical earnings and dominant business profile as the largest non-government property/casualty insurer in Canada.
“In addition, the Group benefits from advantages over its competitors in investment and claims management, as well as pricing and risk selection due to its experienced management team, superior size, geographic and product line diversification, multi-channel distribution network and sound catastrophe management.”
Best also indicated that the ratings “take into consideration the moderate debt leverage of IFC and its added financial flexibility to raise capital through either debt or equity offerings to pursue acquisitions or for general corporate purposes.”
As partial offsetting factors, Best noted “the challenges the Group faces from rapidly rising automobile personal accident benefits claims in Ontario; soft commercial lines pricing; weather-related property claims due to a trend of more frequent and severe storm activity; low interest rates and volatile equities markets.”
In addition, Best pointed out that “mandatory product reforms to auto insurance in Ontario, which go into effect in September 2010, have raised concerns over pricing, reserving and the overall impact these changes will have on future earnings.
“These concerns are partially mitigated by the actions of management to improve profitability and reduce risk through increased risk segmentation, higher premium rates, strong internal management over investments and claims and the market knowledge and experience of localized management teams working within a unified structure.”
Source: A.M. Best
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