AM Best Revises Issuer Credit Rating Outlook to Positive for BMO Life Assurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a” (Excellent) of BMO Life Assurance Company (BMOLAC) (Toronto, Canada). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect BMOLAC’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.

BMOLAC underwrites a full suite of insurance products, including term life, whole life, universal life, critical illness, structured settlements and annuities. The company has a diversified product offering and a leading market share in the Canadian pension risk transfer market. The company distributes its products through a large network of sales agents across Canada and direct-to-consumer channels utilizing its bank parent. BMOLAC is ultimately owned by Bank of Montreal. AM Best has observed continued earnings growth and steady premiums for BMOLAC along with solid market positions in diversified product lines such as segregated funds, structured settlements, pension buyouts and life insurance.

BMOLAC’s risk-adjusted capitalization is maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), which is supported further by its favorable Life Insurance Capital Adequacy Test (LICAT) ratio. BMOLAC’s favorable risk-adjusted capitalization has been driven primarily by strong operating results over the long term. AM Best notes the company has begun paying dividends once again in 2024 to its parent after IFRS 17 transition, with the expectation for dividends to continue going forward.

Partially offsetting these positive rating factors is the continued competition BMOLAC faces from larger insurance organizations to increase its market share in Canada’s mature and concentrated marketplace, as well as managing a book of business with long duration and significantly increased longevity risk exposure. BMOLAC is also increasing its insurance risks with its growth in pension risk transfers and structured settlement annuities. However, AM Best notes that the company has managed these challenges successfully by increasing risk-adjusted capital favorable earnings growth, while extending asset duration through diverse strategies.

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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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