OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” of RBC Life Insurance Company (RBC Life) (Mississauga, Ontario). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect RBC Life’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
RBC Life continues to produce favorable operating results in its core life business as it looks to continue its expansion into the annuity space, all while being backed by a solid balance sheet through fiscal year-end 2018.
RBC Life operates as the Canadian life insurance operation of its ultimate parent, Royal Bank of Canada (RBC) [TSX and NYSE: RY], under RBC Insurance, a division of RBC. RBC Life’s earnings in fiscal-year 2018 reached a record high for the third consecutive year due largely to favorable investment related gains, which overshadowed some unfavorable claims experience in the company’s disability insurance line of business. The company significantly has expanded premiums written in its group annuity and wealth lines of business in recent years, further diversifying its overall book of business and becoming a major player in Canada’s pension risk transfer business. In addition, the company’s Best’s Capital Adequacy Ratio (BCAR) is strong, supported by further substantial growth in absolute capital.
Partially offsetting these positive rating factors are the challenges RBC Life still faces while positioning itself to increase market share in Canada’s competitive insurance environment, which is dominated by several larger organizations. Despite significant premium growth in RBC Life’s group annuity and wealth business, the group annuity business still is gaining traction and the wealth business has yet to achieve scale. As a result, RBC Life is still dependent on its individual life insurance business for earnings.
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