Canal Insurance Co., a family-owned insurer focused on commercial trucking and specialty transportation, is dealing with a ratings downgrade from A.M. Best.
A.M. Best knocked down the A- (Excellent) financial strength ratings to B++ (Good) for both Canal Insurance Co. and Canal Indemnity Co. (known as Canal Group). Both also saw their long-term issuer credit ratings from “a-” to “bbb+”. As well, the credit ratings outlook has been revised to stable from negative.
Supporting the downgrade in its announcement, A.M. Best noted the South Carolina-based insurer’s large stake in commercial transportation “and the external challenges facing this sector in recent years, which have led to sub-par underwriting and operating results in recent years.”
Canal’s internal struggles also appear to be counting against it in terms of ratings, A.M. Best said. Of particular note, according to the ratings agency: “the significant adverse loss reserve development reported by Canal in recent years, and the challengers of returning underwriting results back to historical, profitable levels despite management’s ongoing corrective actions.”
A.M. Best said that the rating level also reflects Canal’s “strong risk-adjusted capitalization” as well as its leading market position in the commercial trucking sector.
A.M. Best said that ratings could approve assuming prior-year reserves stabilize, and if improvement in operating performance and underwriting reaches company goals.
In a sign of some of the struggles Canal has gone through, long-time CEO David Firstenberg resigned without explanation in June 2016, and he was replaced by board member David Pauly.
Pauly stepped back from the CEO slot and resumed his role with the Board of Directors in June 2017, and Paul Brocklebank became Canal’s new president and CEO.
In 2016, Canal Board Chairman Lansing Crane noted Firstenberg’s efforts to grow the company and also add new talent and technology to help Canal become competitive again.
Source: A.M. Best