Dominion Bond Rating Service has assigned an “A (low)” rating to the long-term debt of ING Canada Inc.

It says that the assigned rating, “reflects the dominant market position of ING in the fragmented but consolidating Canadian property and casualty insurance industry as well as its corresponding superior financial performance.

“Through both organic growth and acquisitions, the company has achieved sufficient scale and an efficient platform, including an increasingly comprehensive data base, which allows the company to properly assess and price risk. A strong focus on underwriting and claims management has kept the company’s combined ratio consistently below that of the industry,” DBRS adds.

The agency points out that ING remains exposed to the traditional insurance pricing cycle, but adds that the company’s “superior underwriting results” protect it financial position. The company has been able to release redundant reserves in all but three of the last 10 years, which is superior to the industry record the agency adds.

Since 1988, ING has acquired and integrated 11 competitors, becoming the largest company in the Canadian industry. With an IPO in late 2004, the company acquired a currency with which to facilitate additional acquisitions and to more easily participate in the industry’s consolidation, the agency says.

DBRS identifies additional acquisitions and their integration as a challenge for the company, especially as the industry’s structure becomes more concentrated.

“The company’s multi-channel distribution strategy, including direct channels, may be perceived as a competitive threat to the traditional broker clients (accounting for 90% of written premium), who act as partners in serving the needs of the ultimate insured customer,” it cautions. “Some of this challenge is mitigated by marketing direct sales under the separate Belair Direct brand.”

DBRS concludes: “In addition, superior financial performance keeps the company competitive with respect to its product offerings, thereby preserving its shelf space with brokers. The reputation of the ING brand has great value to the company, but remains contingent upon the continued substantial ownership and sponsorship by ING Groep, of which there is no certainty.”