Best’s News & Research Service - September 20, 2018 02:52 PM (EDT)
A.M. Best Revises Outlooks to Positive for SSQ Life Insurance Company, Inc.
- September 20, 2018 02:52 PM (EDT)
Oldwick //BestWire// - A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of SSQ Life Insurance Company, Inc. (SSQ) (Quebec, Canada)
The ratings reflect SSQ’s balance sheet strength, which A.M. Best categorizes as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
SSQ is primarily involved in group insurance and holds significant market share within the Quebec province. The company’s majority shareholder, Fonds de solidarité FTQ, the largest developmental capital network within Quebec, holds a 71% direct ownership stake and provided capital in 2012 to assist with SSQ’s acquisition of AXA Life of Canada. SSQ continues to prioritize expanding outside of Quebec with some success over the long-term.
The positive outlooks reflect SSQ’s improved risk-adjusted capitalization coupled with a trend of decreasing financial leverage due to significant capital growth and pay down of debt. The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), has improved notably in the previous several years due to the growth in capital. In addition, the company reported a very favorable regulatory solvency ratio during 2018 under AMF’s new capital regime CARLI (capital adequacy requirements for life insurers), which took effect in Quebec on Jan. 1, 2018.
SSQ also continues to produce strong operating performance year-over-year, often with low double-digit returns on equity. Despite some volatility in earnings by line, group insurance continues to generate favorable earnings on growing business volume. The company’s investment and retirement division also has emerged as an earnings producer in the previous two years due to successful implementation of profitability enhancements.
A.M. Best believes that SSQ will continue to maintain or improve its overall balance sheet strength over time, but also will continue to have difficulty expanding outside its home province of Quebec due to intense competition from larger more established entities.
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