OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and issuer credit rating (ICR) to “a-” from “bbb+” of SGI CANADA Insurance Services Limited (SCISL) (Saskatchewan, Canada). Additionally, A.M. Best has upgraded the FSR to A- (Excellent) from B++ (Good) and the ICR to “a-“ from “bbb” of SCISL’s wholly owned subsidiary, Coachman Insurance Company (Coachman) (Ontario, Canada). Furthermore, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of “a-” of SCISL’s operating parent, SGI CANADA (SGI) (Saskatchewan, Canada). These companies are members of the SGI CANADA Group. The outlook on all ratings remains stable.

Moreover, A.M. Best has affirmed the FSR of B++ (Good) and ICR of “bbb” of The Insurance Company of Prince Edward Island (ICPEI), a majority owned subsidiary of SCISL. The outlook on ICPEI’s ratings has been revised to negative from stable.

The ratings of the SGI CANADA Group are reflective of the group’s excellent risk-adjusted capitalization and sound balance sheet liquidity, consistently profitable operating performance, overall geographic and product line diversification as well as the benefits its derives from strong centralized management and consolidated support functions such as financial reporting, reinsurance procurement and investment management. In addition, SGI CANADA maintains significant market share dominance in its home province of Saskatchewan.

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These rating strengths are offset in part by challenges the group faces from expansion into new territories where underwriting results have been below expectations. In addition, market conditions remain generally soft, competition for market share is strong, legal challenges have been made to minor injury soft tissue caps and deductibles on auto insurance in several provinces and the group has been adversely impacted by more frequent and severe weather related events.

The rating for ICPEI is a reflection of its adequate risk-adjusted capitalization, historically strong operating performance and its leadership position among the top five P&C insurance companies in Prince Edward Island based on 2008 direct premium written. The negative outlook is reflective of weakening capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and a declining earnings trend. BCAR has weakened from strong premium risk growth which has not been supported by growth in shareholders’ equity over the last two years. This is primarily due to severe storm losses and unprofitable growth in New Brunswick and Nova Scotia. These concerns are partially mitigated by the company’s knowledgeable management team and the implicit and explicit financial support is receives from its stronger parent.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Company
Analysts
Charles M. Huber, 908-439-2200, ext. 5122
charles.huber@ambest.com
Joseph A. Burtone, 908-439-2200, ext. 5125
joseph.burtone@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Source: A.M. Best Co. Copyright Business Wire 2009 A.M. Best Co. has upgraded the financial strength rating to A- from B++ and issuer credit rating to "a-" from "bbb+" of SGI CANADA Insurance Services Limited . Additionally, A.M. Best has upgraded the FSR to A- from B++ and the ICR to "a-" from "bbb" of SCISL's wholly owned subsidiary, Coachman Insurance Company . Furthermore, A.M. Best has affirmed the FSR of A- and ICR of "a-" of SCISL's oper...