Allianz Canada failure to meet targets results in downgrade

Allianz Canada, and it subsidiary Trafalgar Insurance Company, have been downgraded by rating agency A.M. Best based on their failure to meet earnings targets. In lowering the Canadian companies’ financial strength rating to A (Excellent) from A++ (Superior), A.M. Best cites the “recent and significant deterioration in the overall financial position” of the companies. “Allianz Canada no longer qualifies for core treatment under A.M. Best’s group rating criteria”, meaning the financial strength of parent company Allianz AG will not be enough to bolster the rating of the Canadian operations.For the past two years, Allianz Canada has seen poor underwriting results, with Ontario auto claims largely to blame. As a result the company’s surplus has been eroded and it level of capitalization has fallen below the rating agency’s standards for a superior company.This comes despite a financial boost last year from parent company Allianz AG. However, A.M. best notes that Allianz Canada does have a strategy in place to improve its underwriting results in its core operations. “Allianz Canada’s primary focus is to restore operating profitability over the near-term,” Best notes.