OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” of RBC Life Insurance Company (RBC Life) (Mississauga, Ontario). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect RBC Life’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The company continues to produce favorable operating results in its core life business with added profitability from its group annuity line, which have both contributed to substantial surplus growth in recent years.
RBC Life operates as the Canadian life insurance operation of its ultimate parent, Royal Bank of Canada (RBC) [TSX and NYSE: RY], under RBC Insurance, a division of RBC. RBC Life’s earnings in fiscal-year 2019 reached a record high for the fourth consecutive year due largely to continuingly favorable investment-related gains, which overshadowed some unfavorable claims experience in the company’s health lines of business. The company significantly expanded premiums written in its group annuity and wealth lines of business beginning in 2017, further diversifying its overall book of business and continuing to have a presence in Canada’s pension risk transfer market through 2019. In addition, the company’s Best’s Capital Adequacy Ratio (BCAR) is very strong, supported by further substantial growth in absolute capital from retained earnings.
Partially offsetting these positive rating factors are the challenges RBC Life still faces while positioning itself to increase market share in Canada’s competitive insurance environment, which is dominated by several larger organizations. Despite the diverse product portfolio offering universal life, traditional life, individual and group health, wealth and group annuity, RBC Life is still largely dependent on its individual life insurance business for earnings as health and wealth earnings continue to fluctuate.
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