The rating affirmations consider EQ’s adequate risk-adjusted capitalization and overall profitability. The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains adequate for EQ’s ratings and is supported by low underwriting leverage and a good quality investment portfolio. In addition, EQ’s parent company,
Offsetting rating factors are EQ’s limited business profile and the challenges it faces in profitably growing business in a low growth environment. This is reflected in its underwriting performance, which remains below market average. In 2015, EQ’s combined ratio was higher than expected due to additional reserve provisions and an increase in its expense ratio, as a result of lower-than-expected premium growth.
Positive rating momentum could result from sustained improvement in its underwriting performance above that of its peers. Negative rating pressure could arise from a deteriorating operating performance or deterioration in its parent’s financial condition.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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