A.M. Best Places Ratings of Liberty Life Insurance Company Under Review With Negative Implications

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has placed under review with negative implications the financial strength rating of A (Excellent) and issuer credit rating of “a” of Liberty Life Insurance Company (Greenville, SC). Liberty Life represents the U.S. life insurance and annuity operations of its ultimate parent, Royal Bank of Canada (RBC), Canada’s largest bank as measured by assets and market capitalization and among the largest banks in the world, based on market capitalization.

The rating action follows the announcement by RBC that it is reviewing “strategic options” for its U.S. insurance business. Liberty Life’s ratings recognize the financial strength and historical support of RBC. The company presently benefits from its affiliation with RBC through its capital resources and risk management expertise, as well as the potential distribution opportunities afforded it by other RBC companies in the United States that provide investment, mortgage and banking services. In addition, Liberty Life received capital support of $50 million in 2009 to fund fixed annuity growth and offset realized investment losses. Given this strategic review, A.M. Best is uncertain about RBC’s future commitments to Liberty Life.

A.M. Best anticipates resolving the under review status following further discussions with the management teams in both the United States and Canada, which would include the final resolution of the strategic review.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include “Rating Members of Insurance Groups.” Methodologies 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.