Standard & Poor’s Ratings Services has revised its outlook on Guelph, Ont.-based Co-operators General Insurance Co. to positive from stable, and affirmed its long-term counterparty credit and financial strength ratings on Co-operators General.

“The financial strength rating on Co-operators General reflects the insurance company’s position as one of Canada’s larger property and casualty insurers, and its strong capitalization, asset quality, and liquidity,” said Standard & Poor’s credit analyst Donald Chu, in a release.

“The company’s much improved operating performance is attributed to the general improvement within the sector, and the internal changes brought about by the CEO and executive team that took over the company’s management in 2001.”

S&P noted 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 Co-operators General’s products, and the consolidation occurring in the insurance and financial services industry. Co-operators General is the third-largest P/C insurance company in Canada, with a market share position of about 6% based on gross written premiums of $2.0 billion during 2003.

Standard & Poor’s says it believes the company’s operational performance will continue to improve. Co-operators General’s investment portfolio, which is primarily fixed income, is strong when measured by quality and diversification. It also views Co-operators General’s liquidity profile as strong; liquid assets represent about 70% of the company’s investment portfolio.

S&P says its total shareholder equity base is satisfactory and appropriate for its business mix and ratings level. Co-operators General is under no pressure to declare any dividends to its stakeholders, who are primarily from within the co-operative sector, therefore internally generated cash can be used to fund growth and strategic initiatives.

The positive outlook on Co-operators General reflects the continued improvement in the company’s operating performance. Although the low-interest rate environment and volatile equity markets will continue to put downward pressure on investment returns, if Co-operators General’s operating performance continues to show positive results, a favorable change to the company’s ratings could result.