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-” (Excellent) of Blue Cross Life Insurance Company of Canada (Blue Cross Life). Blue Cross Life is domiciled in Moncton, Canada. The outlook of these Credit Ratings (ratings) is negative. Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect Blue Cross Life’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The rating affirmations reflect Blue Cross Life’s role as a niche provider of life and accident and sickness products to Canada’s insurance market, which has been augmented with the addition of two new distributors in 2021. Also, there is a differentiated organization structure, where Blue Cross Life is the manufacturer of life and accident and sickness products while its shareholders provide the distribution. Its unique accountability model incents its distributors to write quality business, which has led to good profitability.
Partially mitigating factors include a weak risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), compared with its peers. AM Best notes that Blue Cross Life’s risk-adjusted capitalization is enhanced qualitatively by its accountability model and financial flexibility. Private loan assets that were managed by Bridging Finance, which have been in receivership, did not result in any further write downs in 2022 and have made significant recovery of investments.
The negative outlooks reflect continued pressure on the balance sheet strength due to Blue Cross Life’s BCAR and the company awaiting the resolution of a portion of its private loan holdings that are in receivership.
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