A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a+” of Barbados-based Royal Bank of Canada Insurance Company Ltd. (RBCICL) The outlook for both ratings is stable.
RBCICL is a reinsurer that is ultimately owned by Royal Bank of Canada (Toronto, Ontario), one of the largest full service banks in Canada measured by assets. RBCICL primarily reinsures life/health insurance risks from unaffiliated international reinsurers, as well as credit reinsurance risks from European reinsurers. In recent years, A.M. Best notes that RBCICL has added other lines of business with the purpose of diversifying its risk profile, and the company participates as a treaty partner in life retrocession pools, trade credit pools and annuity longevity reinsurance.
“The rating affirmations reflect RBCICL’s diversified operating profile, solid capitalization and strong liquidity, which continues to support its business model and high quality investment portfolio. RBCICL’s investment portfolio is composed of high quality sovereign, corporate and supranational bonds of short duration, further enhancing the company’s already strong liquidity profile,” says the rating agency’s release.
While recognizing the solid market position of Royal Bank of Canada as well as RBCICL’s consistency of net written premiums, A.M. Best notes that premium growth depends upon the rate of new loan originations. Any potential decrease in consumer loan activity in Canada could adversely impact the credit insurance market.