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 Scotia Insurance (Barbados) Limited (SIB) (Barbados). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect SIB’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.
SIB is primarily a life reinsurer that ultimately is owned by The Bank of Nova Scotia (Scotiabank). SIB principally reinsures credit insurance policies underwritten by major third-party life insurance carriers on consumer loans originated by Scotiabank’s retail operations throughout Canada. The company has a long history of favorable underwriting results that have continued through 2022. The company is bolstered further by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and an investment portfolio that provides the entity with substantial liquidity due to its short duration. AM Best notes the company manages capital to specific targets and has kept absolute capitalization levels largely flat, and SIB could recapitalize in a stress scenario by adjusting its shareholder dividend payout.
These strengths are offset partially by SIB’s dependence on lending product originations within Canada, which are heavily dependent on macro-economic conditions. Going forward, in addition to improving creditor insurance cross-sales on loans through face-to-face interactions between bank customers and agents, Scotiabank is also focusing on growing the digital distribution of products, and the impact of such sales initiatives on SIB’s revenue and operating income will continue to be monitored by AM Best.
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