OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best raised the financial strength rating to A- (Excellent) from B ++ (Good) and the long-term credit ratings of issuers to “a-” (Excellent) from “bbb +” (Good) from Canal Insurance Company and Canal Indemnity Company, collectively referred to as Canal Group (Canal). The outlook for credit ratings has been revised from positive to stable.
The ratings reflect the strength of Canal’s balance sheet, which AM Best considers to be very strong, as well as its adequate operational performance, limited business profile and appropriate management of business risks.
The rating revaluations reflect the clear improvement in Canal’s operational performance, the result of re-underwriting initiatives introduced by management several years ago and which are now reflected in the results published by the group in recent years. The significantly improved results in recent times also take into account management’s more conservative provisioning practices and the elimination of the loss provision development from the previous year, which weighed on earnings in previous years.
Canal’s business profile remains limited, as the company is a monoline commercial auto insurer, but the group benefits from its specialist niche focus, well-known brand and long-standing broker distribution network. Canal’s balance sheet is assessed as very strong but is considered to contain a little more volatile risk due to its higher than average equity investments, as in 2020.
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