A.M. Best Withdraws Ratings of Roins Financial Services Limited’s Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co.has upgraded the financial strength rating (FSR) to B+ (Good) from B (Fair) and the issuer credit ratings (ICR) to “bbb-” from “bb+” ofCanadian Northern Shield Insurance Company (CNS) (Vancouver, Canada), as well as the FSR to B++ (Good) from B (Fair) and the ICR to “bbb” from “bb+” of Unifund Assurance Company (Unifund) (St. John’s, Canada).

In addition, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of “a” of Royal & Sun Alliance Insurance Company of Canada (RSA Canada), Western Assurance Company (Western Assurance) (both domiciled in Toronto, Canada) and Quebec Assurance Company (Quebec Assurance) (Montreal, Canada). These companies are together known as RSA Canadian Property/Casualty Pool (RSA Canadian Pool).

Concurrently, A.M. Best has affirmed the FSR of B+ (Good) and ICR of “bbb-” of Ascentus Insurance Ltd. (Ascentus) (Toronto, Canada). Collectively, all of the insurance entities in Canada are referred to as the RSA Group of Canada. All companies are subsidiaries of Roins Financial Services Limited (RFSL) (Ontario, Canada), the Canadian immediate holding company for its ultimate parent, RSA Insurance Group plc (RSA plc) (United Kingdom) [LSE: RSA]. The outlook for all ratings is stable.

At the same time, A.M. Best has withdrawn the ratings as the parent has requested to no longer participate in A.M. Best’s interactive rating process.

The upgrading of the ratings of CNS acknowledges the improved geographic diversity it affords the RSA Group of Canada, as well as increased distribution and growth opportunities within British Columbia, where a majority of its premiums are written. CNS is fully integrated into RSA Group of Canada’s operations and continues to benefit from the implicit and explicit support it receives as a member of that group. Conversely, the negative impact of CNS’ elevated underwriting leverage, high underwriting expenses and fluctuating operating performance will continue to challenge the company going forward.

The upgrading of the ratings of Unifund recognizes its continued improved risk-adjusted capitalization, consistent operating performance and favorable reserve development. The rating actions also reflect Unifund’s strong integration with RSA plc through its systems and procedures as well as its significant contribution to RSA plc’s overall profitability. Historically, Unifund has been a growth vehicle for the overall Canadian organization. In prior years, rapid premium expansion outpaced equity growth, which resulted in elevated underwriting leverage measures and a sharp decline in overall risk-adjusted capitalization. More recently, premium levels have risen gradually, equity has paced this growth and overall risk-adjusted capitalization has plateaued. However, Unifund remains highly leveraged as net and gross underwriting leverage ratios exceed the industry composite. The company primarily is a writer of personal lines insurance for associations and affinity groups throughout Ontario, Alberta, Newfoundland and Labrador and Nova Scotia.

The rating actions on the RSA Canadian Pool reflect A.M. Best’s view that the pool maintains strong risk-adjusted capitalization, solid investment income and sound reserve development. The pool has produced solid underwriting results, which have consistently increased equity over the last five years, prior to stockholder dividends. Collectively, the pool provides commercial property/casualty coverage as well as personal and specialty coverages throughout Canada. The pool maintains a presence in all of the Canadian provinces and distributes its products through multiple distribution channels, including a large independent broker network. The ratings also reflect RSA Canadian Pool’s strong integration with RSA plc through its systems and procedures as well as its significant contribution to RSA plc’s overall profitability.

The ratings of Ascentus are based on its solid level of risk-adjusted capitalization, which supports its underwriting and investment risk. The company’s level of premium volume has sharply declined in recent years, since all private passenger auto and personal property business was renewed into RSA Canada. The company now writes some marine business throughout Canada.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Members of Insurance Groups.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Joel Silverthorn
Senior Financial Analyst
(908) 439-2200, ext. 5120
[email protected]
or
Greg Williams
Managing Senior Financial Analyst
(908) 439-2200, ext. 5815
[email protected]
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
[email protected]
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
[email protected]

Source: A.M. Best Co.