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A.M. Best Affirms Ratings of Echelon General Insurance Company and EGI Financial Holdings Inc. CONTACTS:
FOR IMMEDIATE RELEASE OLDWICK, N.J., Feb. 9, 2010—A.M. Best Co. has affirmed the financial strength rating of B++ (Good) and issuer credit rating (ICR) of “bbb+” of Echelon General Insurance Company (Echelon General). Concurrently, A.M. Best has affirmed the ICR of “bb+” of Echelon General’s publicly traded parent, EGI Financial Holdings Inc. (EFH). Both companies are domiciled in Mississauga, Ontario. The outlook for all ratings is stable. The ratings for Echelon General are reflective of its strong risk-adjusted capitalization, historical profitability, improving product line and geographic diversification, experienced management team in the non-standard auto and niche product markets as well as the additional financial flexibility of EFH. These strengths are partially offset by the company’s concentration in the volatile Ontario auto market, strong competitive market pressures and the challenges it faces in its quest to grow in the Florida and Southern U.S. non-standard auto markets. Echelon General’s balance sheet is strong and displays above average liquidity. In addition, the company has produced better than average earnings over the last five years despite a volatile Ontario auto market, turbulent investment markets and unfavorable results on its travel health product and non-standard auto business assumed from a U.S. carrier. Management has taken corrective action; however, it continues to see the U.S. non-standard auto market as an opportunity for growth, which may put pressure on earnings and overall capitalization. A.M. Best also is concerned about potential regulatory changes to the Ontario auto insurance product and what impact this may have on the company’s future earnings. However, the balance sheet remains strong, and Echelon General’s management team has many years of experience in the non-standard auto business. The rating for EFH is based on the overall financial strength of its operating companies and the subordination of its creditors to the operating companies’ policyholders. In addition to Echelon General, EFH is the parent of CIM Reinsurance Company Ltd., a captive Barbados reinsurer. Furthermore, EFH has established Echelon Insurance Company of America as a vehicle for growing business in the non-standard auto market in the United States. A.M. Best will closely monitor the growth and progress of these companies and their impact on the overall financial strength of the organization. For Best’s Credit Ratings, an overview of the rating process and rating methodologies,. please visit www.ambest.com/ratings. The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. ### |
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