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+” of Royal Bank of Canada Insurance Company Ltd. (RBCICL) (Cayman Islands). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect RBCICL’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.
RBCICL’s balance sheet strength remains very strong due to a conservative investment portfolio, continuing equity growth despite the implications from the ongoing pandemic environment and support from consistently favorable operating earnings. The company’s longstanding record of favorable operating returns reflects its appropriate underwriting practices in Canadian creditor and U.K. longevity products. Well-defined risk limits, targets and procedures to identify and report emerging and ongoing risks, as well as significant stress and sensitivity testing of the company’s capital adequacy, have been in place to maintain these positives throughout the ongoing COVID-19 pandemic.
RBCICL is owned ultimately by Royal Bank of Canada, the largest bank in Canada, as measured by market capitalization. RBCICL primarily reinsures creditor life, life retrocession and longevity business. The company formerly wrote property and trade credit reinsurance, which currently makes up an insignificant portion of the overall book of business. AM Best recognizes the solid market position of Royal Bank of Canada, but notes that RBCICL’s premium growth has been driven by the longevity product in recent years, with the creditor life product remaining largely flat. AM Best also notes that premium growth largely depends on the strength of the Canadian and U.K. economies, and any decrease in consumer loan or longevity deal activity could adversely impact the company’s assumed premium.
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