OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has upgraded the issuer credit rating (ICR) to “a+” from “a” and affirmed the financial strength rating of A (Excellent) of Bank of Montreal Insurance (Barbados) Ltd. (BOMIBL) (Barbados). The outlook for both ratings is stable.
BOMIBL, a reinsurance company, is ultimately owned by Bank of Montreal (Toronto, Ontario), a full service Canadian bank. BOMIBL reinsures creditor life and disability as well as property and casualty risks underwritten by third-party insurers and also participates in life retrocession pools and other life reinsurance agreements.
The ICR upgrade considers BOMIBL’s solid underwriting performance, favorable risk-adjusted capitalization and strong liquidity. BOMIBL’s financial strength and strong operating trends are founded upon the fundamentals of a conservative business model, a strategy focused upon underwriting profits in its core creditor life business and assuming minimal investment risk. The balance sheet is supported by a portfolio of high quality liquid short-term assets, which are well matched to the company’s liability portfolio. The stability of the Canadian banking sector and BOMIBL during the recent financial crisis demonstrated the strength of both the banking and insurance operations.
While recognizing the solid market position of the banking parent and BOMIBL’s stable profitable operations, A.M. Best notes that growth within the company is determined by a narrow mix of business and the expected correlation of new business volume in the Canadian economy. The ratings also consider BOMIBL’s fluctuating gross written premiums over the last few years, in addition to the company’s concentration in short-term securities, which has resulted in lower investment income. Potential exposure to catastrophe claims can impact BOMIBL’s earnings in the short term.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; and “Assessing Country Risk.” Methodologies can be found at www.ambest.com/ratings/methodology.
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