AM Best Affirms Credit Ratings of Royal Bank of Canada Insurance Company Ltd.

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 Royal Bank of Canada Insurance Company Ltd. (RBCICL) (Cayman Islands). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect RBCICL’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.

RBCICL’s balance sheet strength assessment of very strong is due to a conservative investment portfolio, and support from consistently favorable operating earnings that enhanced equity growth over the past five years despite the COVID-19 pandemic environment. The company’s favorable operating return on equity on a longstanding basis provides significant support to the balance sheet and reflects RBCICL’s appropriate underwriting practices in Canadian creditor and U.K. longevity reinsurance products. 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, have been in place to maintain these positive attributes.

RBCICL is owned ultimately by Royal Bank of Canada, the largest bank in Canada, as measured by market capitalization. RBCICL primarily reinsures creditor life, longevity business and a closed block of life retrocession 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 the continued competition RBCICL faces from larger international reinsurance organizations in a concentrated marketplace. RBCICL’s premium growth has been driven by the longevity product in recent years, with the creditor life product remaining flat. AM Best also notes that premium growth largely depends on the strength of the Canadian and U.K. economies, and any decrease in consumer loan or longevity deal activity could adversely impact the company’s assumed premium.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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