CGU Canada Receives Ratings
A.M. Best Co. assigned a FSR of “A” to CGU Insurance Company of Canada (CGU), Scarborough, Ontario, and Elite Insurance Co., Ontario, Canada. A.M. Best also assigned a FSR of “A-” to Scottish and York Insurance Company Ltd., Ontario, and Traders General Insurance Co., Ontario, which are strategic subsidiaries of CGU Group Canada, Ltd., and affiliated companies of CGU Insurance Co. of Canada.
In addition, an “A” group rating has been extended and assigned to Victoria Reinsurance Ltd., Barbados. The company reinsures the risks of affiliate subsidiaries of CGU Group Canada Ltd.
The rating reflects CGU’s position as the largest property and casualty insurance company in Canada, where it maintains a diverse portfolio of personal, commercial and specialty products. The rating also considers the good capital position, sound underwriting leverage, large asset base and diversified independent broker network of CGU. A.M. Best also views favorably the financial flexibility CGU receives as a strategic subsidiary of CGNU, plc, UK.
Partially offsetting these rating strengths are the very competitive conditions in the Canadian property and casualty market, which have resulted in unfavorable underwriting trends. CGU’s poor underwriting results are attributed to deteriorating operating results in its auto business in Ontario and the Atlantic regions. A.M. Best expects a slow recovery, and the effects of these actions have yet to be determined.
The ratings for the two subsidiaries reflect their strategic role within CGU’s Canadian operations. The rating difference is attributed to mixed operating results in the subsidiaries, adverse loss development trends and continued competitive pressures in the Canadian marketplace, which will further challenge profitability.
The rating for Elite reflects its strategic affiliation to CGU Insurance Company of Canada. The rating also reflects the company’s good operating performance and capital position.
Likewise, A.M. Best has assigned a FSR of “A” to Pilot Insurance Co. in Toronto. The rating reflects Pilot’s excellent capitalization, consistently strong underwriting results, focused management and its strong relationship with local brokers in markets primarily outside the greater Toronto area. Partially offsetting these strengths is Pilot’s lack of geographic diversification.