A.M. Best Affirms Ratings of RBC Life Insurance Company
A.M. Best Co. has affirmed the financial strength rating of A
(Excellent) and issuer credit rating of “a” of RBC Life Insurance
Company (RBC Life) (Mississauga, Ontario). The outlook for both
ratings is stable.
RBC Life’s ratings reflect its adequate risk-adjusted capitalization,
increase in net gains from operations, as well as the strong brand
recognition of the Royal Bank of Canada (RBC) [TSX and NYSE: RY]
name in the Canadian market. RBC Life operates as the Canadian life
insurance operation of its parent, RBC under RBC Insurance, a division
of RBC.
RBC Life maintains a significant market position in Canada in the
individual living benefits and group long-term disability insurance
markets. RBC Life also has maintained a focus on organically growing its
individual life segment through enhanced product features on its term
life insurance products. Earnings for RBC Life improved in 2012 as
morbidity in the individual and group accident and sickness lines of
business were more favorable than previous years. A.M. Best expects RBC
to continue to support RBC Life’s growth initiatives, if needed, as it
has demonstrated in the past.
Partially offsetting these positive rating factors are the challenges
RBC Life faces while positioning itself to increase market share in the
Canadian individual life insurance marketplace, as well as the
continuing intense competition in the group and individual accident and
sickness markets. RBC Life also has generated inconsistent results in
its individual life line over the last several years, which has been
impacted by the new business costs related to new sales growth and the
continued low interest rate environment. A.M. Best also notes that RBC
Life maintains a modest position in the wealth management market through
its general account annuities and segregated funds.
A.M. Best believes RBC Life’s ratings are well positioned at the current
level for the near to medium term. Key factors that could result in
negative rating actions include a significant and sustained decline in
RBC Life’s risk-adjusted capitalization, large investment losses or
operating performance on the individual and group accident and sickness
lines that does not meet A.M. Best’s expectations over a sustained
period.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology
Founded in 1899, A.M. Best Company is the world’s oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.
