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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 31, 2014 11:03 AM (EDT)
A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a" of BMO Life Assurance Company (BMOLAC) (Toronto, Canada). The outlook for both ratings is stable. BMOLAC is an indirect wholly owned subsidiary of Bank of Montreal (BMO) through BMO Life Insurance Company, an intermediate holding company.
In 2009, BMO closed on its acquisition of AIG Life Insurance Company of Canada (AIG Canada) and subsequently converted AIG's business platform and distribution to BMOLAC. BMOLAC underwrites a full suite of individual life insurance products including term life, whole life, universal life, critical illness, structured settlements and annuities. The company distributes its products across Canada through independent agents, as well as in the direct-to-consumer market.
The ratings of BMOLAC reflect its positive operating performance, more than adequate risk-adjusted capitalization, diversified product offerings and its strategic role within BMO. BMOLAC has experienced strong net premiums written and capital growth in recent years as it maintains a solid market position in certain niche product lines. BMOLAC also benefits from BMO's explicit capital investment. Furthermore, A.M. Best believes additional capital would be provided when warranted.
Offsetting rating factors include challenges BMOLAC faces while positioning to increase market share and achieve meaningful scale in Canada's highly concentrated life insurance marketplace. The ratings also reflect the earnings volatility and challenges associated with the current low interest rate environment. A.M. Best also notes that sales of individual annuity products have declined as the company has de-risked its product offerings.
A.M. Best believes that upward rating movement for BMOLAC is unlikely over the near to medium term. Downward rating actions could result from deterioration in the operating performance, capitalization or balance sheet strength of BMO Life Assurance Company or from any reduced financial condition of the parent company, BMO.
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:
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.