A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of Saskatchewan insurer SGI Canada. The rating outlook is stable.

Additionally, A.M. Best has affirmed the financial strength ratings of B+ (Very Good) of SGI Canada’s subsidiaries, SGI Canada Insurance Services Ltd. (SCISL) and The Insurance Co. of Prince Edward Island (ICPEI).

A.M. Best has also downgraded the financial strength rating to B (Fair) from B+ (Very Good) of Coachman Insurance Co. The outlook for the ratings of all these subsidiaries is negative.

The agency says these rating actions reflect SGI Canada’s strong capitalization and dominant market position in Saskatchewan, its experienced management team, consistently favorable operating performance and the implicit support provided by its government parent.

These strengths are partially offset by the challenges confronting SGI Canada through SCISL and its subsidiaries, Coachman and ICPEI. A.M. Best views favorably SGI Canada’s efforts to diversify its book and reduce its concentration of risk in Saskatchewan. However, its out-of-province subsidiaries operate in difficult markets and are being challenged to produce profitable results.

The rating downgrade of Coachman is due to its diminishing capital position and continued loss of surplus as a result of poor operating performance.

However, A.M. Best notes that Coachman has taken several initiatives to protect surplus; improve underwriting results by raising rates and eliminating unprofitable business; reduce expenses; and minimize its automobile exposure in Toronto. A.M. Best anticipates that the company may need additional capital if operating results do not improve in the near term.