A.M. Best Revises Outlook to Negative for Peace Hills General Insurance Company
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OLDWICK, N.J.--(Business Wire)-- A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of Peace Hills General Insurance Company (Peace Hills) (Alberta, Canada). The ratings of Peace Hills are indicative of its historical profitability, favorable reserve development trend and a sound reinsurance program. Profitability was generally better than the industry average, which had resulted in strong capital adequacy ratios. This was achieved through above-average underwriting income supplemented by steady investment income and capital gains. The negative outlook is a result of Peace Hills` weakening capitalization due primarily to its declining asset values and diminishing earnings. Additionally, the company is geographically concentrated in the province of Alberta, exposing it to the volatile automobile market in that province as well as local competitive market pressures, severe weather-related risks and regulatory intervention. In addition, investment leverage is above-average, while returns have lagged behind industry averages. A.M. Best anticipates that Peace Hills will be challenged to improve capitalization and reverse its current earnings trend. However, the company is taking action to reduce its investment risk and establish an enterprise risk management program, which should provide long-term benefits. For Best`s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. A.M. Best Co. Analysts: Charles M. Huber, 908-439-2200, ext. 5122 charles.huber@ambest.com or Joseph A. Burtone, 908-439-2200, ext. 5125 joseph.burtone@ambest.com or Public Relations: Jim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com or Rachelle Morrow, 908-439-2200, ext. 5378 rachelle.morrow@ambest.com Copyright Business Wire 2009
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