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 BMO Reinsurance Limited (BMO Re) (Barbados). The outlook of these Credit Ratings (ratings) is stable. Concurrently, AM Best has withdrawn these Credit Ratings (ratings) as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect BMO Re’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
BMO Re is an indirect wholly owned subsidiary of Bank of Montreal (BMO) that assumes creditor and life reinsurance business. Prior to 2020, BMO Re underwrote property catastrophe and specialty property and casualty business but made the decision to exit the space due to several years of fluctuating results. The ratings of BMO Re reflect its stable net income trends, strong return on equity and strong liquidity. In addition, BMO Re has maintained the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as low levels of credit risk within its investment portfolio, which is invested primarily in highly rated sovereign, supranational and corporate bonds.
While recognizing the strength of the ownership relationship with BMO, AM Best notes that volatility in Canada’s economy following the COVID-19 pandemic and the banking industry’s move to digital transactions, thereby losing face-to-face sales opportunities, will likely continue to impact the creditor life insurance market and BMO Re’s ability to maintain current premium levels. AM Best also notes that the company has remained highly profitable over the long term despite previous volatile property/casualty results and the ongoing global pandemic reflecting solid underwriting in the core creditor reinsurance business line.
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