Standard & Poor’s Ratings Services has raised its long-term counterparty credit and financial strength ratings on Guelph, Ont.-based Co-operators General Insurance Co.
S&P says CGIC is the third-largest property and casualty insurance company in Canada, with a market share position of about 6% based on gross written premiums of $2.0 billion in 2004. \u201cCGIC’s operating performance for first-quarter 2005 and full-year 2004 has improved significantly compared with previous years,\u201d it notes. \u201cThe company achieved net earnings of $36.5 million (return on equity of 21.6%) and $139.5 million (ROE of 23.6%) for first-quarter 2005 and full-year 2004, respectively.\u201d And, 2004 represented the first time the company generated full-year underwriting profits in nearly a decade. Standard & Poor’s says it believes CGIC will continue this trend of underwriting profits.
\u201cCGIC’s much improved operating performance is attributed to the general improvement within the sector, and to internal changes brought about by a new chief executive officer and executive team that took over in 2001. The company’s customer relationship management and multiproduct strategy are gaining traction, as client satisfaction is at an all-time high and customer retention remains stable,\u201d it says.
S&P adds that it believes CGIC’s total shareholder equity base of $840.5 million to be satisfactory and appropriate for its business mix and ratings level.
\u201cThe insurer financial strength rating on CGIC reflects the insurance company’s position as one of Canada’s larger P&C insurers; its diversified mix of personal and commercial products; the strength of its sister organization, Co-operative Life Insurance Co.; its strong ties to the co-operative\/credit union system; and its strong capitalization, asset quality, and liquidity,\u201d it says.
The rating agency’s outlook on the firm is stable, which reflects Standard & Poor’s expectation the company will continue to experience strong and consistent operating performance. Standard & Poor’s says it views the company’s ties to the co-operative\/credit union system as a competitive advantage; this, combined with the company’s diversified mix of products, should help business franchise growth, it notes.
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