Global credit ratings agency, AM Best, has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Definity Insurance Company (Definity Insurance).
At the same time, the agency has also revised the outlooks to positive from stable and affirmed the Long-Term ICR of “bbb-” (Good) of Definity Financial Corporation.
Both organisations collectively are known as Definity and are domiciled in Ontario, Canada.
Best stated that the ratings of Definity Insurance reflect the company’s balance sheet strength, which the agency assesses as very strong.
Best also cited Definity’s marginal operating performance, neutral business profile and appropriate enterprise risk management.
In addition, the revision of Definity’s outlooks to positive also reflects recent improvements to the businesses underwriting results as the company completes upfront investments related to the expansion of its brands in personal lines and digital investments in technology and analytics, which are contributing to better risk selection and claims practices.
The outlook change reflects favorable improvement in underwriting performance within personal and commercial lines over the last three years.
Further, Best also noted that the positive outlooks recognize their expectation that the firm’s operating performance will continue to benefit from management’s underwriting discipline and improvements in scale and business mix, whilst also maintaining an overall “very strong” balance sheet strength assessment.
According to the agency, Definity Insurance’s risk-adjusted capitalization is anticipated to remain at a level that solid business growth in line with the group’s strategy to be a top five property & casualty carrier in Canada.
The ratings also acknowledge the diversification in its lines of business and distribution systems, which contribute to its overall business profile.
Another key factor to note, is that the company became public in November 2021 and to date maintains an unlevered balance sheet.
Best stated that it expects that in the future the company will manage financial leverage and interest coverage ratios at a level that is aligned with the group’s current ratings.
