A.M. Best Co. has downgraded the financial strength ratings of several of AXA Canada Inc.’s wholly owned property and casualty insurance subsidiaries. The outlook on all of the ratings is negative.

The financial strength ratings have been downgraded to A (Excellent) from A+ (Superior) for AXA Assurances Inc. and its wholly owned subsidiary, AXA Assurances agricoles inc.

A.M. Best has also downgraded the financial strength ratings to A- (Excellent) from A (Excellent) for AXA Pacific Insurance Co. and to B++ (Very Good) from A- (Excellent) for the Insurance Corp. of Newfoundland, Ltd.

Furthermore, A.M. Best has affirmed the A- (Excellent) ratings of AXA Insurance (Canada) and Anglo Canada General Insurance Company.

The rating downgrade of AXA Assurances Inc. is based upon A.M. Best’s opinion that the overall financial strength of the company, which includes its wholly owned property and casualty subsidiaries, does not support a superior rating.

Furthermore, A.M. Best believes that future surplus growth could be challenged by dividend requirements due to excess regulatory capital, emerging soft market pricing particularly in commercial lines, the potential increase in claims frequency and the uncertainty that regulatory changes to automobile insurance will have upon the long-term underwriting performance of its subsidiary insurance companies.

The downgrade of AXA Assurances agricoles inc. is based upon its group rating status with its parent.

The rating downgrade of AXA Pacific Insurance Co. is based upon the company’s below average underwriting and operating performance, persistent adverse development on prior calendar and accident year claims and uncertainty in its Alberta automobile product due to regulatory changes in that province.

The rating downgrade of the Insurance Corp. of Newfoundland is based upon the company’s risk adjusted capitalization, which A.M. Best’s believes does not support an excellent rating.

The rating affirmations of AXA Insurance Canada and Anglo Canada General Insurance Co. are based upon their excellent level of capitalization, favorable underwriting leverage, improvement over the last two years in underwriting and operating performance, strong broker relations and the explicit financial support of AXA Assurances Inc. The ratings are under pressure due to the ongoing challenges these companies face in producing underwriting profits, weakened investment markets, regulated rate freezes and roll backs on Ontario auto, and a downward turn in the underwriting cycle towards soft market conditions.

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