AM Best has affirmed the A+ (superior) financial strength rating of Allianz Cornhill Insurance.
It said the rating reflected Allianz Cornhill's status as a core subsidiary of its parent company Allianz AG, its excellent stand-alone risk-adjusted capitalisation and business profile and its improving operating performance.
The rating outlook is negative, in line with the outlook for its parent company, said AM Best.
Allianz Cornhill's stand-alone risk-adjusted capitalisation is expected to be managed at least in the excellent range despite the prospect of higher dividend payments, which are in line with the parent company's cost of capital requirement, it said.
The ratings agency said it also believed that the credible underwriting, claims management and cost-reduction initiatives implemented by Allianz Cornhill should enable the company to report a combined ratio of about 95% and a pre-tax return on equity above 15% at year-end 2004.
Allianz Cornhill reported a 278% increase in 2003 pre-tax earnings to £152.2m and a combined ratio of 95.2%.
Although the downward phase of the motor pricing cycle is likely to constrain revenues, growth of about 5% is expected in 2004 as the company targets new business opportunities in the SME market and seeks to grow its household account, concluded AM Best.
