A.M. Best has affirmed the financial strength rating of A
(Excellent) and the 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,
improved earnings in core business lines, as well as the strong brand
name recognition of the Royal Bank of Canada (RBC) [TSX and NYSE:
RY] 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 growing its individual
and group life segments through an increase in their range of insurance
product solutions and improvement of their cross-selling capabilities.
RBC Life has seen increased sales of targeted insurance products through
propriety distribution sources and continued expansion of wealth product
offerings. A.M. Best believes RBC will 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
competitive Canadian individual life and group accident and sickness
markets, as well as the challenges due to the continued low interest
rate environment. Earnings have fluctuated in recent periods and while
positive in 2014, were impacted by higher than expected morbidity rates
in the individual and group disability lines of business. 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.
The current ratings of RBC Life are adequately supported by key
financial measures surrounding risk-adjusted capitalization, operating
results and business profile 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 deterioration of 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.
Key insurance criteria reports utilized:
• Evaluating Non-Insurance Ultimate Parents
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for U.S. and Canadian Life/Health Insurers
This press release relates to rating(s) that have been published on
A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please visit A.M. Best’s Ratings
& Criteria Center.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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Copyright Business Wire 2015