CCS.PR.C Outlook Positive, Says S&P

Standard & Poor’s has announced:

  • •We have revised our assessments of Co-Operators’ business risk profile, financial risk profile, and liquidity.
  • •We are affirming our ratings on Co-operators and its core operating subsidiaries.
  • •The positive outlook reflects our expectation that the successful execution of their strategy can lead to increased diversification benefits from non-P/C business and is supported by very strong capitalization.

The outlook is positive. We expect stabilization in the performance from the life business, profitability from the asset-management business, and continued strong results from the P/C and brokerage businesses, contributing about one-third to group earnings. We expect Co-operators General Insurance Co. to continue to drive profitability for the group, and the total earnings to correlate with the broader performance of the Canadian personal-lines sector. We further expect capitalization to remain at least very strong.

We could consider a positive rating action in the next 24 months if the company demonstrates its ability to penetrate its cooperative membership further and effectively cross-sell to policyholders across the platform while exhibiting performance in line with the Canadian P/C industry. In addition we would expect the life operations to continue to improve profitability sustaining return on equity in the 6-8% range and for the asset management and brokerage division to be accretive to earnings. We also expect the consolidated ROR to be in the 7%-9% range.

The sole affected instrument is CCS.PR.C.

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