Aviva rating upgraded on earnings performance

Aviva Canada and its subsidiaries have seen their financial strength and long-term counterparty credit ratings lifted to “A+” from “A”, with a stable outlook, by Standard & Poor’s.S&P says the upgrade reflects the improved earnings posted by Aviva in 2003 and early 2004. “The introduction of government auto reforms, rate increases, capital gains generated within the companies’ investment portfolio, and the internal stop loss arrangement provided by the parent company, Aviva plc, all contributed to this improved performance,” says S&P credit analyst Donald Chu.He adds that changes to the company’s management infrastructure and oversight will also allow it to leverage the strength of Aviva plc, the number-one insurer in the U.K. with strong capitalization and consistent earnings.Offsetting factors include the cyclical nature of insurance, the competitive business environment and the commodity-like nature of the company’s products, S&P notes. However, the rater adds, the stable outlook reflects the view that Aviva will be able to remain strong despite market cycles, as well as reflecting the individual capital strength of the subsidiaries.The rating encompasses Aviva Insurance Co. of Canada, Elite Insurance Co., Pilot Insurance Co., Scottish & York Insurance Co. Ltd. and Traders General Insurance Co.