AM Best Affirms Credit Ratings of TD Reinsurance (Barbados) Inc.

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 TD Reinsurance (Barbados) Inc. (TD Re). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TD 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.

TD Re experienced elevated claims experience in recent years mainly owing to the impact of natural catastrophes on its Canadian property/casualty (P/C) book of business; however, TD Re remains a profitable subsidiary of The Toronto-Dominion Bank (TD Bank). TD Bank is among the leading banks in Canada, as measured by market capitalization, and TD Re has high brand recognition as it executes its strategy of reinsuring and managing Canadian and European creditor life and European longevity business, which partly diversifies revenues and earnings from a P/C block that is concentrated somewhat by province. TD Re transitioned to IFRS 17 reporting on Nov. 1, 2023. The company holds a contractual service margin liability for its profitable reinsurance contracts, which partly contributed to a decline in reported capital on transition to IFRS 17 but is expected to be released into earnings over time.

The parent bank is a strong organization with approximately CAD 115 billion of IFRS equity at financial year-end 2024 and CAD 2 trillion in assets. The group earned approximately CAD 8.3 billion in net income on CAD 57.2 billion in revenue in fiscal-year 2024. AM Best notes that given the parent’s prior record of capital support provided to TD Re through internal loans, TD Bank may at its discretion provide additional support should TD Re need to maintain its risk-adjusted capitalization level, as measured by Best’s Capital Adequacy Ratio (BCAR). While TD Bank was fined for a shortfall in its controls related to anti-money laundering in 2024, TD Bank swiftly implemented corrective action and TD Re implicitly benefits from the financial strength and well-respected name of its ultimate parent.

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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