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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 17, 2024 04:03 PM (EDT)
AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Echelon Insurance (Echelon) (Mississauga, Ontario).
The Credit Ratings (ratings) reflect Echelon’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The positive outlooks reflect the improvement in Echelon’s overall balance sheet strength assessment, which is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Additionally, the company’s capital base has grown substantially over the recent five-year period, driven by a strategic shift to target commercial lines business, generating organic earnings, and capital contributions from its parent, CAA Club Group (CCG). Moreover, AM Best expects Echelon to generate additional capital relief in upcoming years as a result of the amalgamation with Orion Travel Insurance, a CCG subsidiary, which also will provide the company with added diversification.
The positive outlooks further recognize an improvement in reserve development trends since 2020. While reserve development was adverse several years prior to 2023, AM Best notes that development was centered on bodily injury coverage in the Ontario Specialty automobile line of business related to accident years without quota share reinsurance. Beginning in 2020, Echelon began ceding a majority of the Ontario automobile book of business, which has assisted the company in reducing adverse reserve development trends. AM Best expects to see the continued strengthening of Echelon’s balance sheet, driven by profitable operating results and a sustained improvement in reserve development.
Echelon was founded in 1998 and became a member of CCG in 2019. As a leading Specialty insurer in Canada, the company works closely with broker partners to provide personal and commercial insurance solutions to protect Canadian families and businesses. The company continues to improve the diversification of its product portfolio by deepening its commercial focus, responding to growing market demand and reducing exposure to the volatile Ontario Specialty automobile line of business. Echelon’s parent company, CCG, is a not-for-profit organization that offers emergency roadside assistance, travel and insurance services to over 6.5 million Canadians.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.