OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Royal Bank of Canada Insurance Company Ltd. (RBCICL) (Barbados). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect RBCICL’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.
RBCICL’s balance sheet strength remains very strong due to an investment portfolio composed of cash and sovereign, corporate and supranational bonds of high credit quality, resulting in a very favorable liquidity position. Additionally, the company’s longstanding record of favorable earnings and operating returns largely reflects its conservative underwriting practices. Well-defined risk limits, targets and procedures to identify and report emerging and ongoing risks, as well as significant stress and sensitivity testing of the company’s capital adequacy, are in place to maintain these positives.
RBCICL is owned ultimately by Royal Bank of Canada, the largest bank in Canada, as measured by market capitalization. RBCICL primarily reinsures creditor life, life retrocession and longevity business. The company formerly wrote property and trade credit reinsurance, which currently makes up an insignificant portion of the overall book of business. AM Best recognizes the solid market position of Royal Bank of Canada, but notes that RBCICL’s premium growth has been driven by the longevity product in recent years, with the creditor life line remaining largely flat. AM Best also notes that premium growth largely depends on the strength of the Canadian and global economies, and any decrease in consumer loan activity could impact the credit insurance market adversely.
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