Kingsway Canadian ops downgraded by A.M. Best

The Canadian companies of Kingsway Financial Services Kingsway General Insurance Co. and York Fire and Casualty are being downgraded by rating agency A.M. Best, following release of the companies’ 2003 yearend results.A.M. Best has lowered the financial strength ratings on the two companies to “B++” (very good) from “A-” (excellent), and placed both on negative watch. The rating agency notes that the companies have shown continued poor underwriting performance and weak capitalization. Prior year accident claims in non-standard auto and commercial trucking are to blame for the drag on results, says A.M. Best, adding that even boosted capital in 2003 could not make up for keep pace with premium growth. The rater also has concerns about whether auto insurance reform in Ontario and Alberta will offer any relief.Mitigating these factors is the strong stance Kingsway has taken on rate increases in the past two years, as well as its attempts to lower claims costs. Credit is also given to the parent company’s capital-raising and reserve strengthening moves. However, the rater notes, “The ratings of all the Kingsway insurance subsidiaries in both the United States and Canada will remain under pressure pending the ability of Kingsway to lower underwriting leverage by raising capital, meeting their 2004 profit targets, controlling premium growth and elimiating adverse loss reserve development.”