AM Best Downgrades Credit Ratings of ivari; Places Credit Ratings Under Review With Negative Implications

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating (FSR) to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” (Excellent) from “aa-” (Superior) of ivari (Toronto, Ontario, Canada). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications. The rating actions follow an announcement from ivari’s parent company Wilton Re Ltd. (Wilton Re) that it has entered into an agreement to sell ivari to Sagicor Financial Company Ltd. (Sagicor). The ratings of Wilton Re are unchanged.

The ratings of ivari reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM). AM Best notes that ivari’s ratings would be impacted adversely further with the sale to Sagicor, as the company would no longer receive the benefit of a group rating from being a member of the Wilton Re Group. ivari’s ratings are placed under review with negative implications pending Wilton Re’s completion of the sale of the Canada-based company to Sagicor. The transaction is expected to close in 2023 and the ratings will remain under review until the transaction is finalized.

ivari’s projected 2022 risk-based capital is assessed as strong, as measured by Best’s Capital Adequacy Ratio (BCAR), which is an improvement from the year-end 2021 standalone capital assessment for ivari. The improvement in ivari’s projected BCAR is driven by its reduction in equity exposure and completed and planned capital contributions from Wilton Re. ivari’s operating performance has fluctuated over recent years, with the company reporting a net operating gain of CAD 74 million and return on equity of 5% as of year-end 2021, compared with a net loss in 2020. ivari’s business profile is favorable as the Toronto-based company maintains its position as a leading provider of universal life insurance in Canada’s middle market, with approximately 700,000 policyholders.

The announced sale is expected to enhance Wilton Re’s capital stability and eliminate its exposure to Canadian regulatory changes. Additionally, this transaction will allow Wilton Re to focus more on its administrative reinsurance strategy and clients. This focus includes a continued risk appetite while remaining disciplined in its pricing approach.

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