Standard & Poor’s Ratings Services today said it raised its long-term counterparty credit and financial strength ratings on Guelph, Ont.-based Co-operators General Insurance Co. (CGIC) to ‘BBB’ from ‘BBB-’.

At the same time, Standard & Poor’s raised its long-term Canadian national scale preferred stock rating on the company to ‘P-3’ from ‘P-3 (Low)’ and its long-term global scale preferred stock rating to ‘BB’ from ‘BB-’. The outlook is positive.

“The insurer financial strength rating on CGIC reflects its position as one of Canada’s larger property and casualty (P/C) insurers; its strong ties to the co-operative/credit union system; and its strong capitalization, asset quality, and liquidity,” said Standard & Poor’s credit analyst Donald Chu.

CGIC’s much improved operating performance is attributed to the general improvement within the sector, and to internal changes brought about by a new CEO and executive team that took over in 2001. The company’s customer relationship management and multi-product strategy seems to be gaining traction, as client satisfaction is at an all time high and customer retention remains stable.

S&P views CGIC ias a core subsidiary of The Co-operators Group Ltd. The challenges facing the company include the cyclical nature of this sector’s operating performance, a very competitive business environment, the commodity-like nature of CGIC’s products, and the consolidation occurring in the insurance and financial services industry.

As a stock company whose ownership is primarily from within the co-operative sector, CGIC does not have full access to the equity capital markets. S&P notes, however, that CGIC is not under pressure to declare any dividends to its stakeholders because they are primarily from within the co-operative sector, and thus internally generated cash can be used to fund growth and strategic initiatives.

The positive outlook on CGIC reflects the company’s strong management team and Standard & Poor’s expects the company will continue to experience a fundamental improvement in its operating performance and business franchise.