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 TD Reinsurance (Barbados) Inc. (TD Re) (Barbados). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect TD Re’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.
TD Re primarily is a life reinsurer that ultimately is owned by The Toronto-Dominion Bank (TD Bank). TD Re principally reinsures credit insurance policies underwritten by third-party life insurance carriers on consumer loans originated by TD Bank’s Canadian retail branches. In 2017, the company finalized its first general insurance transaction with another TD Bank subsidiary, with a 25% quota share on homeowners and private passenger auto insurance. Despite this change, the company has continued to have a high return on equity due to favorable underwriting results on a solid capital base through 2019. Furthermore, the company maintains multiple high quality investment portfolios that are managed to match the specific liability profiles of the business they support.
These strengths are offset partially by a dependence on Canadian consumer loan originations for growth, which are anticipated to decline due to the COVID-19 pandemic. Furthermore, while earnings have been favorable for the general insurance line of business, this line of business could potentially see earnings volatility, AM Best notes that the overall balance sheet strength remains very strong.
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